Today I will take a look at Lancaster Colony Corporation’s (NASDAQ:LANC) most recent earnings update (30 September 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the food industry performed. As an investor, I find it beneficial to assess LANC’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Did LANC’s Recent Performance Stack Up Against Its Past?
LANC’s trailing twelve-month earnings (from 30 September 2018) of US$145m has jumped 30% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.4%, indicating the rate at which LANC is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is merely a result of an industry uplift, or if Lancaster Colony has seen some company-specific growth.
In terms of returns from investment, Lancaster Colony has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 17% exceeds the US Food industry of 8.8%, indicating Lancaster Colony has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Lancaster Colony’s debt level, has declined over the past 3 years from 25% to 24%.
What does this mean?
Though Lancaster Colony’s past data is helpful, it is only one aspect of my investment thesis. While Lancaster Colony has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Lancaster Colony to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LANC’s future growth? Take a look at our free research report of analyst consensus for LANC’s outlook.
- Financial Health: Are LANC’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 email@example.com.