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After looking at Universal Corporation's (NYSE:UVV) latest earnings announcement (31 March 2019), 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Universal's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Commentary On UVV's Past Performance
UVV's trailing twelve-month earnings (from 31 March 2019) of US$104m has declined by -1.5% 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 -1.2%, indicating the rate at which UVV is growing has slowed down. Why is this? Let's examine what's occurring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Universal has fallen short of achieving a 20% return on equity (ROE), recording 8.0% instead. Furthermore, its return on assets (ROA) of 5.6% is below the US Tobacco industry of 12%, indicating Universal's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Universal’s debt level, has increased over the past 3 years from 9.1% to 9.7%.
What does this mean?
Though Universal's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. You should continue to research Universal to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for UVV’s future growth? Take a look at our free research report of analyst consensus for UVV’s outlook.
- Financial Health: Are UVV’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 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 firstname.lastname@example.org. 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.