In this article, I will take a look at Chuy’s Holdings, Inc.’s (NASDAQ:CHUY) most recent earnings update (30 September 2018) and compare these latest figures against its performance over the past few years, along with how the rest of CHUY’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.
Were CHUY’s earnings stronger than its past performances and the industry?
CHUY’s trailing twelve-month earnings (from 30 September 2018) of US$18m has jumped 11% 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 18%, indicating the rate at which CHUY is growing has slowed down. What could be happening here? Well, let’s examine what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, Chuy’s Holdings has fallen short of achieving a 20% return on equity (ROE), recording 9.4% instead. Furthermore, its return on assets (ROA) of 6.6% is below the US Hospitality industry of 7.7%, indicating Chuy’s Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Chuy’s Holdings’s debt level, has declined over the past 3 years from 13% to 7.3%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Chuy’s Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CHUY’s future growth? Take a look at our free research report of analyst consensus for CHUY’s outlook.
- Financial Health: Are CHUY’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 September 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.