When At Home Group Inc.'s (NYSE:HOME) announced its latest earnings (26 October 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were At Home Group's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not HOME actually performed well. Below is a quick commentary on how I see HOME has performed.
Could HOME beat the long-term trend and outperform its industry?
HOME's trailing twelve-month earnings (from 26 October 2019) of US$39m has jumped 35% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 40%, indicating the rate at which HOME is growing has slowed down. To understand what's happening, let’s take a look at what’s going on with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, At Home Group has fallen short of achieving a 20% return on equity (ROE), recording 4.7% instead. Furthermore, its return on assets (ROA) of 2.4% is below the US Specialty Retail industry of 6.1%, indicating At Home Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for At Home Group’s debt level, has declined over the past 3 years from 7.1% to 3.8%.
What does this mean?
Though At Home Group's past data is helpful, it is only one aspect of my investment thesis. While At Home Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research At Home Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HOME’s future growth? Take a look at our free research report of analyst consensus for HOME’s outlook.
- Financial Health: Are HOME’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 26 October 2019. This may not be consistent with full year annual report figures.
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