When Kaman Corporation (NYSE:KAMN) released its most recent earnings update (29 June 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Kaman’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not KAMN actually performed well. Below is a quick commentary on how I see KAMN has performed.
Were KAMN’s earnings stronger than its past performances and the industry?
KAMN’s trailing twelve-month earnings (from 29 June 2018) of US$59.2m has jumped 13.1% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 1.4%, indicating the rate at which KAMN is growing has accelerated. What’s enabled this growth? Let’s see whether it is merely owing to industry tailwinds, or if Kaman has experienced some company-specific growth.
The rise in earnings seems to be driven by a robust top-line increase beating its growth rate of costs. Though this brought about a margin contraction, it has made Kaman more profitable.
Inspecting growth from a sector-level, the US trade distributors industry has been multiplying average earnings growth of 50.5% over the past twelve months, and a less exciting 7.1% over the past five. This growth is a median of profitable companies of 24 Trade Distributors companies in US including Taiga Building Products, Beacon Roofing Supply and CCOM Group. This shows that whatever uplift the industry is enjoying, Kaman has not been able to reap as much as its average peer.
In terms of returns from investment, Kaman has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. Furthermore, its return on assets (ROA) of 5.5% is below the US Trade Distributors industry of 5.7%, indicating Kaman’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Kaman’s debt level, has declined over the past 3 years from 10.0% to 9.2%.
What does this mean?
Though Kaman’s past data is helpful, it is only one aspect of my investment thesis. While Kaman has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Kaman to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KAMN’s future growth? Take a look at our free research report of analyst consensus for KAMN’s outlook.
- Financial Health: Are KAMN’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 29 June 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.