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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Silicon Motion Technology Corporation's (NASDAQ:SIMO) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Were SIMO's earnings stronger than its past performances and the industry?
SIMO's trailing twelve-month earnings (from 31 December 2018) of US$100m has jumped 34% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 20%, indicating the rate at which SIMO is growing has accelerated. How has it been able to do this? Let's see whether it is solely a result of an industry uplift, or if Silicon Motion Technology has seen some company-specific growth.
In terms of returns from investment, Silicon Motion Technology has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 14% exceeds the US Semiconductor industry of 9.7%, indicating Silicon Motion Technology has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Silicon Motion Technology’s debt level, has declined over the past 3 years from 21% to 19%.
What does this mean?
Though Silicon Motion Technology's past data is helpful, it is only one aspect of my investment thesis. While Silicon Motion Technology has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Silicon Motion Technology to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SIMO’s future growth? Take a look at our free research report of analyst consensus for SIMO’s outlook.
- Financial Health: Are SIMO’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.
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.