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Does J & J Snack Foods Corp.'s (NASDAQ:JJSF) Past Performance Indicate A Weaker Future?

Simply Wall St

Examining J & J Snack Foods Corp.'s (NasdaqGS:JJSF) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess JJSF's latest performance announced on 28 September 2019 and weigh these figures against its longer term trend and industry movements.

Check out our latest analysis for J & J Snack Foods

Commentary On JJSF's Past Performance

JJSF's trailing twelve-month earnings (from 28 September 2019) of US$95m has declined by -8.5% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.6%, indicating the rate at which JJSF is growing has slowed down. Why is this? Well, let's look at what's occurring with margins and whether the entire industry is facing the same headwind.

NasdaqGS:JJSF Income Statement, December 4th 2019

In terms of returns from investment, J & J Snack Foods has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 8.6% exceeds the US Food industry of 6.3%, indicating J & J Snack Foods has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for J & J Snack Foods’s debt level, has declined over the past 3 years from 16% to 13%.

What does this mean?

Though J & J Snack Foods's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I recommend you continue to research J & J Snack Foods to get a more holistic view of the stock by looking at:

  1. Financial Health: Are JJSF’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.
  2. Valuation: What is JJSF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether JJSF is currently mispriced by the market.
  3. 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 28 September 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.