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When Ingredion Incorporated's (NYSE:INGR) announced its latest earnings (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Ingredion's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not INGR actually performed well. Below is a quick commentary on how I see INGR has performed.
Commentary On INGR's Past Performance
INGR's trailing twelve-month earnings (from 31 December 2018) of US$443m has declined by -15% 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 7.4%, indicating the rate at which INGR is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Ingredion has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 9.0% exceeds the US Food industry of 6.9%, indicating Ingredion has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Ingredion’s debt level, has declined over the past 3 years from 16% to 16%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 74% to 87% over the past 5 years.
What does this mean?
Ingredion's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Ingredion to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for INGR’s future growth? Take a look at our free research report of analyst consensus for INGR’s outlook.
- Financial Health: Are INGR’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.
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.