In this article, I will take a look at Standex International Corporation’s (NYSE:SXI) most recent earnings update (30 September 2019) and compare these latest figures against its performance over the past few years, along with how the rest of SXI’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Commentary On SXI’s Past Performance
SXI’s trailing twelve-month earnings (from 30 September 2019) of US$45m has jumped 37% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -7.4%, indicating the rate at which SXI is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is only due to an industry uplift, or if Standex International has seen some company-specific growth.
In terms of returns from investment, Standex International has fallen short of achieving a 20% return on equity (ROE), recording 9.6% instead. Furthermore, its return on assets (ROA) of 5.9% is below the US Machinery industry of 7.4%, indicating Standex International’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Standex International’s debt level, has declined over the past 3 years from 13% to 9.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 37% to 40% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are impacting the entire industry thus the high industry growth rate over the same period of time. I recommend you continue to research Standex International to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SXI’s future growth? Take a look at our free research report of analyst consensus for SXI’s outlook.
- Financial Health: Are SXI’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 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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