Examining ResMed Inc.'s (NYSE:RMD) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess RMD's latest performance announced on 30 September 2019 and weight these figures against its longer term trend and industry movements.
How RMD fared against its long-term earnings performance and its industry
RMD's trailing twelve-month earnings (from 30 September 2019) of US$419m has jumped 25% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.8%, indicating the rate at which RMD is growing has accelerated. What's the driver of this growth? Let's take a look at if it is solely because of industry tailwinds, or if ResMed has seen some company-specific growth.
In terms of returns from investment, ResMed has fallen short of achieving a 20% return on equity (ROE), recording 20% instead. However, its return on assets (ROA) of 11% exceeds the US Medical Equipment industry of 7.0%, indicating ResMed has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for ResMed’s debt level, has increased over the past 3 years from 16% to 18%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as ResMed gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research ResMed to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RMD’s future growth? Take a look at our free research report of analyst consensus for RMD’s outlook.
- Financial Health: Are RMD’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 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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