Analyzing US Ecology, Inc.'s (NASDAQ:ECOL) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess ECOL's recent performance announced on 31 March 2019 and compare these figures to its long-term trend and industry movements.
Was ECOL weak performance lately part of a long-term decline?
ECOL's trailing twelve-month earnings (from 31 March 2019) of US$48m has declined by -9.4% 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 12%, indicating the rate at which ECOL is growing has slowed down. Why could this be happening? Let's examine what's occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, US Ecology has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 6.6% exceeds the US Commercial Services industry of 6.5%, indicating US Ecology has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for US Ecology’s debt level, has declined over the past 3 years from 11% to 8.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 1.9% to 93% over the past 5 years.
What does this mean?
US Ecology'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 US Ecology to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ECOL’s future growth? Take a look at our free research report of analyst consensus for ECOL’s outlook.
- Financial Health: Are ECOL’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 March 2019. 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.
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