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When Ocean Bio-Chem, Inc. (NASDAQ:OBCI) announced its most recent earnings (31 December 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Ocean Bio-Chem 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 OBCI has performed.
Could OBCI beat the long-term trend and outperform its industry?
OBCI's trailing twelve-month earnings (from 31 December 2018) of US$2.8m has increased by 7.4% 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 20%, indicating the rate at which OBCI is growing has slowed down. Why could this be happening? Well, let's examine what's occurring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Ocean Bio-Chem has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 8.3% is below the US Household Products industry of 8.5%, indicating Ocean Bio-Chem's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Ocean Bio-Chem’s debt level, has increased over the past 3 years from 9.1% to 12%.
What does this mean?
Ocean Bio-Chem's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Ocean Bio-Chem to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for OBCI’s future growth? Take a look at our free research report of analyst consensus for OBCI’s outlook.
- Financial Health: Are OBCI’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 December 2018. 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.