In this article, I will take a look at Hill-Rom Holdings, Inc.'s (NYSE:HRC) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, along with how the rest of HRC's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
How Did HRC's Recent Performance Stack Up Against Its Past?
HRC's trailing twelve-month earnings (from 30 June 2019) of US$215m has declined by -7.2% 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 32%, indicating the rate at which HRC is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Hill-Rom Holdings has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 6.7% is below the US Medical Equipment industry of 6.7%, indicating Hill-Rom Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Hill-Rom Holdings’s debt level, has increased over the past 3 years from 5.9% to 10%.
What does this mean?
Though Hill-Rom Holdings's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Hill-Rom Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HRC’s future growth? Take a look at our free research report of analyst consensus for HRC’s outlook.
- Financial Health: Are HRC’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.
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