Understanding how Steven Madden, Ltd. (NASDAQ:SHOO) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Steven Madden is doing by comparing its latest earnings with its long-term trend as well as the performance of its luxury industry peers.
Did SHOO’s recent earnings growth beat the long-term trend and the industry?
SHOO’s trailing twelve-month earnings (from 31 December 2018) of US$129m has increased by 9.5% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 1.1%, indicating the rate at which SHOO is growing has accelerated. How has it been able to do this? Let’s see if it is solely due to an industry uplift, or if Steven Madden has seen some company-specific growth.
In terms of returns from investment, Steven Madden has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 12% exceeds the US Luxury industry of 8.7%, indicating Steven Madden has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Steven Madden’s debt level, has declined over the past 3 years from 24% to 22%.
What does this mean?
Though Steven Madden’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Steven Madden gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Steven Madden to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SHOO’s future growth? Take a look at our free research report of analyst consensus for SHOO’s outlook.
- Financial Health: Are SHOO’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 31 December 2018. This may not be consistent with full year annual report figures.
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