Assessing Chemed Corporation's (NYSE:CHE) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess CHE's latest performance announced on 30 June 2019 and evaluate these figures to its historical trend and industry movements.
Did CHE's recent earnings growth beat the long-term trend and the industry?
CHE's trailing twelve-month earnings (from 30 June 2019) of US$201m has increased by 5.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which CHE is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Chemed has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the US Healthcare industry of 5.2%, indicating Chemed has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Chemed’s debt level, has increased over the past 3 years from 28% to 29%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 36% to 14% over the past 5 years.
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 Chemed gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Chemed to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CHE’s future growth? Take a look at our free research report of analyst consensus for CHE’s outlook.
- Financial Health: Are CHE’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 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.