When Tootsie Roll Industries Inc (NYSE:TR) released its most recent earnings update (30 September 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Tootsie Roll Industries has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see TR has performed.
Commentary On TR’s Past Performance
TR’s trailing twelve-month earnings (from 30 September 2018) of US$77m has jumped 15% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.5%, indicating the rate at which TR is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is merely due to an industry uplift, or if Tootsie Roll Industries has seen some company-specific growth.
In terms of returns from investment, Tootsie Roll Industries has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 7.7% is below the US Food industry of 8.5%, indicating Tootsie Roll Industries’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Tootsie Roll Industries’s debt level, has declined over the past 3 years from 11% to 8.0%.
What does this mean?
Though Tootsie Roll Industries’s past data is helpful, it is only one aspect of my investment thesis. While Tootsie Roll Industries has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Tootsie Roll Industries to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TR’s future growth? Take a look at our free research report of analyst consensus for TR’s outlook.
- Financial Health: Are TR’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.