When The Eastern Company's (NASDAQ:EML) announced its latest earnings (29 June 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Eastern's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not EML actually performed well. Below is a quick commentary on how I see EML has performed.
Did EML beat its long-term earnings growth trend and its industry?
EML's trailing twelve-month earnings (from 29 June 2019) of US$12m has jumped 46% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 13%, indicating the rate at which EML is growing has accelerated. What's enabled this growth? Let's see whether it is solely attributable to industry tailwinds, or if Eastern has seen some company-specific growth.
In terms of returns from investment, Eastern has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 7.2% is below the US Machinery industry of 7.4%, indicating Eastern's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Eastern’s debt level, has increased over the past 3 years from 9.0% to 12%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Eastern gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Eastern to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EML’s future growth? Take a look at our free research report of analyst consensus for EML’s outlook.
- Financial Health: Are EML’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 29 June 2019. 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 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. Thank you for reading.