After looking at Weis Markets Inc’s (NYSE:WMK) latest earnings announcement (30 June 2018), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Could WMK beat the long-term trend and outperform its industry?
WMK’s trailing twelve-month earnings (from 30 June 2018) of US$103m has jumped 26% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.3%, indicating the rate at which WMK is growing has accelerated. What’s the driver of this growth? Let’s see whether it is merely due to industry tailwinds, or if Weis Markets has seen some company-specific growth.
In terms of returns from investment, Weis Markets has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 7.2% is below the US Consumer Retailing industry of 7.6%, indicating Weis Markets’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Weis Markets’s debt level, has declined over the past 3 years from 8.8% to 6.8%.
What does this mean?
Though Weis Markets’s past data is helpful, it is only one aspect of my investment thesis. While Weis Markets 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 Weis Markets to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WMK’s future growth? Take a look at our free research report of analyst consensus for WMK’s outlook.
- Financial Health: Are WMK’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.