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Measuring The Gorman-Rupp Company's (NYSE:GRC) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess GRC's recent performance announced on 31 March 2019 and weigh these figures against its long-term trend and industry movements.
How Well Did GRC Perform?
GRC's trailing twelve-month earnings (from 31 March 2019) of US$38m has jumped 21% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.7%, indicating the rate at which GRC is growing has accelerated. How has it been able to do this? Let's take a look at if it is merely owing to an industry uplift, or if Gorman-Rupp has experienced some company-specific growth.
In terms of returns from investment, Gorman-Rupp has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 10% exceeds the US Machinery industry of 7.6%, indicating Gorman-Rupp has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Gorman-Rupp’s debt level, has increased over the past 3 years from 11% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 2.0% to 0.09% over the past 5 years.
What does this mean?
Gorman-Rupp's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Gorman-Rupp to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GRC’s future growth? Take a look at our free research report of analyst consensus for GRC’s outlook.
- Financial Health: Are GRC’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 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.