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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on EnerSys (NYSE:ENS) useful as an attempt to give more color around how EnerSys is currently performing.
Could ENS beat the long-term trend and outperform its industry?
ENS's trailing twelve-month earnings (from 29 September 2019) of US$178m has jumped 47% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.0%, indicating the rate at which ENS is growing has accelerated. What's enabled this growth? Well, let’s take a look at if it is merely a result of industry tailwinds, or if EnerSys has seen some company-specific growth.
In terms of returns from investment, EnerSys has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. Furthermore, its return on assets (ROA) of 6.6% is below the US Electrical industry of 6.9%, indicating EnerSys's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for EnerSys’s debt level, has declined over the past 3 years from 15% to 10%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 39% to 87% over the past 5 years.
What does this mean?
EnerSys's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While EnerSys 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 EnerSys to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ENS’s future growth? Take a look at our free research report of analyst consensus for ENS’s outlook.
Financial Health: Are ENS’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 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.
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.