Assessing US Physical Therapy Inc’s (NYSE:USPH) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess USPH’s recent performance announced on 30 June 2018 and evaluate these figures to its long-term trend and industry movements.
How USPH fared against its long-term earnings performance and its industry
USPH’s trailing twelve-month earnings (from 30 June 2018) of US$21.79m has increased by 9.98% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 1.88%, indicating the rate at which USPH is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is merely because of industry tailwinds, or if U.S. Physical Therapy has experienced some company-specific growth.
The rise in earnings seems to be bolstered by a strong top-line increase outstripping its growth rate of costs. Though this has led to a margin contraction, it has made U.S. Physical Therapy more profitable. Eyeballing growth from a sector-level, the US healthcare industry has been growing its average earnings by double-digit 13.91% in the prior twelve months, and 11.06% over the past five years. This growth is a median of profitable companies of 25 Healthcare companies in US including Cardinal Health, LifePoint Health and Diplomat Pharmacy. This suggests that whatever uplift the industry is enjoying, U.S. Physical Therapy has not been able to realize the gains unlike its average peer.
In terms of returns from investment, U.S. Physical Therapy has fallen short of achieving a 20% return on equity (ROE), recording 11.70% instead. However, its return on assets (ROA) of 7.55% exceeds the US Healthcare industry of 6.45%, indicating U.S. Physical Therapy has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for U.S. Physical Therapy’s debt level, has declined over the past 3 years from 17.83% to 11.56%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 11.50% to 18.63% over the past 5 years.
What does this mean?
Though U.S. Physical Therapy’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as U.S. Physical Therapy gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research U.S. Physical Therapy to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for USPH’s future growth? Take a look at our free research report of analyst consensus for USPH’s outlook.
- Financial Health: Are USPH’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 June 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.