Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Hyster-Yale Materials Handling Inc’s (NYSE:HY) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Hyster-Yale Materials Handling
Did HY’s recent EPS Growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to assess many different companies on a similar basis, using the latest information. For Hyster-Yale Materials Handling, the latest twelve-month earnings is $63.2M, which compared to last year’s figure, has climbed up by 32.22%. Given that these figures are fairly short-term thinking, I have determined an annualized five-year value for Hyster-Yale Materials Handling’s net income, which stands at $83.4M. This means though earnings increased from last year’s level, over a longer period of time, Hyster-Yale Materials Handling’s earnings have been falling on average.
What could be happening here? Let’s examine what’s going on with margins and whether the rest of the industry is facing the same headwind. Revenue growth over the past few years, has been positive, nevertheless earnings growth has been declining. This means Hyster-Yale Materials Handling has been ramping up expenses, which is hurting margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 17.33% in the past twelve months, and a more subdued 4.54% over the past five years. This suggests that whatever tailwind the industry is gaining from, Hyster-Yale Materials Handling is able to leverage this to its advantage.
What does this mean?
Hyster-Yale Materials Handling’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are influencing the entire industry thus the high industry growth rate over the same time period. I suggest you continue to research Hyster-Yale Materials Handling to get a more holistic view of the stock by looking at:
1. 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.
2. 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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.