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Quest Diagnostics Incorporated's (NYSE:DGX) Earnings Dropped -7.9%, How Did It Fare Against The Industry?

Simply Wall St

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Investors with a long-term horizong may find it valuable to assess Quest Diagnostics Incorporated's (NYSE:DGX) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Quest Diagnostics is currently performing.

View our latest analysis for Quest Diagnostics

Did DGX perform worse than its track record and industry?

DGX's trailing twelve-month earnings (from 31 March 2019) of US$720m has declined by -7.9% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 4.5%, indicating the rate at which DGX is growing has slowed down. Why is this? Well, let's look at what's transpiring with margins and if the rest of the industry is experiencing the hit as well.

NYSE:DGX Income Statement, May 8th 2019

In terms of returns from investment, Quest Diagnostics has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 7.5% exceeds the US Healthcare industry of 6.5%, indicating Quest Diagnostics has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Quest Diagnostics’s debt level, has declined over the past 3 years from 14% to 12%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Quest Diagnostics to get a better picture of the stock by looking at:

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