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Today I will examine Escalade, Incorporated's (NASDAQ:ESCA) latest earnings update (23 March 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of ESCA's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Could ESCA beat the long-term trend and outperform its industry?
ESCA's trailing twelve-month earnings (from 23 March 2019) of US$19m has jumped 40% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which ESCA is growing has accelerated. How has it been able to do this? Let's see whether it is only because of an industry uplift, or if Escalade has experienced some company-specific growth.
In terms of returns from investment, Escalade has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 13% exceeds the US Leisure industry of 9.0%, indicating Escalade has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Escalade’s debt level, has declined over the past 3 years from 9.9% to 9.2%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Escalade gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Escalade to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ESCA’s future growth? Take a look at our free research report of analyst consensus for ESCA’s outlook.
- Financial Health: Are ESCA’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 23 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 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.