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Measuring Lancaster Colony Corporation's (NASDAQ:LANC) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess LANC's recent performance announced on 31 March 2019 and compare these figures to its historical trend and industry movements.
Did LANC's recent earnings growth beat the long-term trend and the industry?
LANC's trailing twelve-month earnings (from 31 March 2019) of US$150m has jumped 14% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.1%, indicating the rate at which LANC is growing has accelerated. What's enabled this growth? Let's take a look at whether it is solely attributable to an industry uplift, or if Lancaster Colony has experienced some company-specific growth.
In terms of returns from investment, Lancaster Colony has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 17% exceeds the US Food industry of 5.8%, indicating Lancaster Colony has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Lancaster Colony’s debt level, has declined over the past 3 years from 33% to 23%.
What does this mean?
Though Lancaster Colony's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Lancaster Colony to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LANC’s future growth? Take a look at our free research report of analyst consensus for LANC’s outlook.
- Financial Health: Are LANC’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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Thank you for reading.