When Vulcan Materials Company (NYSE:VMC) announced its most recent earnings (30 September 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Vulcan Materials has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see VMC has performed.
How Did VMC's Recent Performance Stack Up Against Its Past?
VMC's trailing twelve-month earnings (from 30 September 2019) of US$604m has declined by -16% 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 26%, indicating the rate at which VMC is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Vulcan Materials has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 7.0% exceeds the US Basic Materials industry of 6.3%, indicating Vulcan Materials has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Vulcan Materials’s debt level, has increased over the past 3 years from 8.5% to 8.9%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research Vulcan Materials to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for VMC’s future growth? Take a look at our free research report of analyst consensus for VMC’s outlook.
- Financial Health: Are VMC’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 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 email@example.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.
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