Has The Michaels Companies Inc (NASDAQ:MIK) Improved Earnings Growth In Recent Times?
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at The Michaels Companies Inc’s (NASDAQ:MIK) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Michaels Companies
Did MIK’s recent earnings growth beat the long-term trend and the industry?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to assess various companies on a more comparable basis, using new information. For Michaels Companies, its most recent bottom-line (trailing twelve month) is US$380.92M, which compared to the previous year’s figure, has risen by a fairly unexciting 4.62%. Given that these figures are relatively myopic, I’ve determined an annualized five-year figure for Michaels Companies’s net income, which stands at US$289.49M This shows that, on average, Michaels Companies has been able to consistently raise its earnings over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is only because of an industry uplift, or if Michaels Companies has seen some company-specific growth. In the past couple of years, Michaels Companies increased its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US specialty retail industry has been growing, albeit, at a subdued single-digit rate of 8.97% over the prior year, and 5.61% over the past five. This suggests that whatever tailwind the industry is profiting from, Michaels Companies has not been able to reap as much as its industry peers.
What does this mean?
Though Michaels Companies’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? I recommend you continue to research Michaels Companies to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MIK’s future growth? Take a look at our free research report of analyst consensus for MIK’s outlook.
2. Financial Health: Is MIK’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 28 October 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.
