When HNI Corporation (NYSE:HNI) announced its most recent earnings (28 December 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well HNI has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see HNI has performed.
Were HNI’s earnings stronger than its past performances and the industry?
HNI’s trailing twelve-month earnings (from 28 December 2019) of US$111m has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.4%, indicating the rate at which HNI is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is solely because of an industry uplift, or if HNI has experienced some company-specific growth.
In terms of returns from investment, HNI has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 8.2% exceeds the US Commercial Services industry of 6.0%, indicating HNI has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for HNI’s debt level, has declined over the past 3 years from 21% to 16%.
What does this mean?
HNI’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 HNI to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HNI’s future growth? Take a look at our free research report of analyst consensus for HNI’s outlook.
- Financial Health: Are HNI’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 28 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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