After looking at Marine Products Corporation's (NYSE:MPX) latest earnings announcement (31 December 2018), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Could MPX beat the long-term trend and outperform its industry?
MPX's trailing twelve-month earnings (from 31 December 2018) of US$28m has jumped 48% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 25%, indicating the rate at which MPX is growing has accelerated. How has it been able to do this? Let's see if it is only a result of an industry uplift, or if Marine Products has experienced some company-specific growth.
In terms of returns from investment, Marine Products has invested its equity funds well leading to a 38% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 28% exceeds the US Leisure industry of 9.5%, indicating Marine Products has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Marine Products’s debt level, has increased over the past 3 years from 21% to 43%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Marine Products to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MPX’s future growth? Take a look at our free research report of analyst consensus for MPX’s outlook.
- Financial Health: Are MPX’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 December 2018. This may not be consistent with full year annual report figures.
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