Assessing Hyster-Yale Materials Handling Inc’s (NYSE:HY) 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 HY’s latest performance announced on 31 March 2018 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Hyster-Yale Materials Handling
Was HY’s weak performance lately a part of a long-term decline?
I look at the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to examine different companies on a more comparable basis, using new information. For Hyster-Yale Materials Handling, its latest earnings (trailing twelve month) is US$45.40M, which, in comparison to last year’s level, has fallen by -10.81%. Since these values are somewhat short-term, I’ve computed an annualized five-year value for HY’s net income, which stands at US$82.55M This doesn’t seem to paint a better picture, as earnings seem to have gradually been diminishing over the longer term.
Why could this be happening? Well, let’s take a look at what’s occurring with margins and whether the entire industry is experiencing the hit as well. Revenue growth over the last couple of years, has been positive, nevertheless earnings growth has been deteriorating. This implies that Hyster-Yale Materials Handling has been ramping up expenses, which is harming margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 24.85% in the previous twelve months, and a less exciting 4.41% over the previous five years. This shows that any uplift the industry is profiting from, Hyster-Yale Materials Handling has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Typically companies that face a drawn out period of reduction in earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. I suggest you continue to research Hyster-Yale Materials Handling to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HY’s future growth? Take a look at our free research report of analyst consensus for HY’s outlook.
- Financial Health: Is HY’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.