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Marcus & Millichap, Inc. (NYSE:MMI): Has Recent Earnings Growth Beaten Long-Term Trend?

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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Marcus & Millichap, Inc. (NYSE:MMI) useful as an attempt to give more color around how Marcus & Millichap is currently performing.

View our latest analysis for Marcus & Millichap

How Well Did MMI Perform?

MMI's trailing twelve-month earnings (from 30 June 2019) of US$84m has jumped 31% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which MMI is growing has accelerated. What's the driver of this growth? Well, let’s take a look at whether it is only because of industry tailwinds, or if Marcus & Millichap has experienced some company-specific growth.

NYSE:MMI Income Statement, September 19th 2019
NYSE:MMI Income Statement, September 19th 2019

In terms of returns from investment, Marcus & Millichap has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 12% exceeds the US Real Estate industry of 4.6%, indicating Marcus & Millichap has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Marcus & Millichap’s debt level, has declined over the past 3 years from 42% to 19%.

What does this mean?

Though Marcus & Millichap's past data is helpful, it is only one aspect of my investment thesis. While Marcus & Millichap has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Marcus & Millichap to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for MMI’s future growth? Take a look at our free research report of analyst consensus for MMI’s outlook.

  2. Financial Health: Are MMI’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.

  3. 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 June 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 editorial-team@simplywallst.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.