When Hubbell Incorporated (NYSE:HUBB) announced its most recent earnings (30 September 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Hubbell performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see HUBB has performed.
Have HUBB’s earnings improved against past performances and the industry?
HUBB’s trailing twelve-month earnings (from 30 September 2018) of US$292m has increased by 1.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -4.8%, indicating the rate at which HUBB is growing has accelerated. How has it been able to do this? Let’s take a look at if it is only a result of an industry uplift, or if Hubbell has seen some company-specific growth.
In terms of returns from investment, Hubbell has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. Furthermore, its return on assets (ROA) of 7.1% is below the US Electrical industry of 7.4%, indicating Hubbell’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Hubbell’s debt level, has declined over the past 3 years from 19% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 109% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. There could be variables that are impacting the entire industry thus the high industry growth rate over the same time period. You should continue to research Hubbell to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HUBB’s future growth? Take a look at our free research report of analyst consensus for HUBB’s outlook.
- Financial Health: Are HUBB’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 September 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 firstname.lastname@example.org.