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Simpson Manufacturing Co., Inc.'s (NYSE:SSD) Earnings Grew 30%, Did It Beat Long-Term Trend?

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When Simpson Manufacturing Co., Inc. (NYSE:SSD) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Simpson Manufacturing has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see SSD has performed.

Check out our latest analysis for Simpson Manufacturing

Could SSD beat the long-term trend and outperform its industry?

SSD's trailing twelve-month earnings (from 31 March 2019) of US$124m has jumped 30% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which SSD is growing has accelerated. How has it been able to do this? Let's see if it is merely attributable to an industry uplift, or if Simpson Manufacturing has experienced some company-specific growth.

NYSE:SSD Income Statement, May 4th 2019

In terms of returns from investment, Simpson Manufacturing has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 12% exceeds the US Building industry of 8.6%, indicating Simpson Manufacturing has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Simpson Manufacturing’s debt level, has increased over the past 3 years from 14% to 19%.

What does this mean?

Though Simpson Manufacturing's past data is helpful, it is only one aspect of my investment thesis. While Simpson Manufacturing has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Simpson Manufacturing to get a more holistic view of the stock by looking at:

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