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Examining Educational Development Corporation's (NasdaqGM:EDUC) 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 EDUC's latest performance announced on 31 August 2019 and compare these figures to its longer term trend and industry movements.
Was EDUC's weak performance lately a part of a long-term decline?
EDUC's trailing twelve-month earnings (from 31 August 2019) of US$5.7m has declined by -8.3% 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 39%, indicating the rate at which EDUC is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Educational Development has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.7% exceeds the US Retail Distributors industry of 7.2%, indicating Educational Development has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Educational Development’s debt level, has increased over the past 3 years from 8.4% to 15%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Educational Development to get a better picture of the stock by looking at:
Financial Health: Are EDUC’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.
Valuation: What is EDUC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EDUC is currently mispriced by the market.
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 31 August 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.
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. Thank you for reading.