Today I will take a look at Herman Miller, Inc.’s (NasdaqGS:MLHR) most recent earnings update (29 February 2020) and compare these latest figures against its performance over the past few years, as well as how the rest of the commercial services industry performed. As an investor, I find it beneficial to assess MLHR’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Well Did MLHR Perform?
MLHR’s trailing twelve-month earnings (from 29 February 2020) of US$211m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which MLHR is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely because of an industry uplift, or if Herman Miller has experienced some company-specific growth.
In terms of returns from investment, Herman Miller has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the US Commercial Services industry of 6.0%, indicating Herman Miller has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Herman Miller’s debt level, has declined over the past 3 years from 22% to 17%.
What does this mean?
Herman Miller’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 suggest you continue to research Herman Miller to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MLHR’s future growth? Take a look at our free research report of analyst consensus for MLHR’s outlook.
- Financial Health: Are MLHR’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 29 February 2020. This may not be consistent with full year annual report figures.
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.
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