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Dorman Products, Inc.'s (NASDAQ:DORM) Earnings Grew 25%, Did It Beat Long-Term Trend?

Simply Wall St

After reading Dorman Products, Inc.'s (NASDAQ:DORM) latest earnings update (29 December 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether DORM has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.

See our latest analysis for Dorman Products

Could DORM beat the long-term trend and outperform its industry?

DORM's trailing twelve-month earnings (from 29 December 2018) of US$134m has jumped 25% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.0%, indicating the rate at which DORM is growing has accelerated. What's the driver of this growth? Let's see whether it is only a result of industry tailwinds, or if Dorman Products has experienced some company-specific growth.

NasdaqGS:DORM Income Statement, April 15th 2019

In terms of returns from investment, Dorman Products has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 15% exceeds the US Auto Components industry of 7.6%, indicating Dorman Products has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Dorman Products’s debt level, has declined over the past 3 years from 28% to 23%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Dorman Products has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Dorman Products to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for DORM’s future growth? Take a look at our free research report of analyst consensus for DORM’s outlook.
  2. Financial Health: Are DORM’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.
  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 29 December 2018. This may not be consistent with full year annual report figures.

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.

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. Thank you for reading.