Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Eagle Materials Inc.’s (NYSE:EXP) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
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Did EXP’s recent earnings growth beat the long-term trend and the industry?
EXP’s trailing twelve-month earnings (from 30 September 2018) of US$277m has jumped 32% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which EXP is growing has accelerated. What’s enabled this growth? Let’s see if it is merely owing to an industry uplift, or if Eagle Materials has seen some company-specific growth.
In terms of returns from investment, Eagle Materials has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 13% exceeds the US Basic Materials industry of 7.9%, indicating Eagle Materials has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Eagle Materials’s debt level, has increased over the past 3 years from 13% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 59% to 44% over the past 5 years.
What does this mean?
Eagle Materials’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Eagle Materials has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Eagle Materials to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EXP’s future growth? Take a look at our free research report of analyst consensus for EXP’s outlook.
- Financial Health: Are EXP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.