Does Lam Research Corporation’s (NASDAQ:LRCX) Recent Track Record Look Strong?
Assessing Lam Research Corporation’s (NASDAQ:LRCX) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess LRCX’s recent performance announced on 23 September 2018 and evaluate these figures to its longer term trend and industry movements.
See our latest analysis for Lam Research
How Well Did LRCX Perform?
LRCX’s trailing twelve-month earnings (from 23 September 2018) of US$2.3b has jumped 15% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 36%, indicating the rate at which LRCX is growing has slowed down. To understand what’s happening, let’s look at what’s going on with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Lam Research has invested its equity funds well leading to a 44% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 21% exceeds the US Semiconductor industry of 8.5%, indicating Lam Research has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Lam Research’s debt level, has increased over the past 3 years from 14% to 38%.
What does this mean?
Lam Research’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Lam Research gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Lam Research to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for LRCX’s future growth? Take a look at our free research report of analyst consensus for LRCX’s outlook.
Financial Health: Are LRCX’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 23 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 editorial-team@simplywallst.com.
