For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Orbotech Ltd. (NASDAQ:ORBK) useful as an attempt to give more color around how Orbotech is currently performing.
Could ORBK beat the long-term trend and outperform its industry?
ORBK’s trailing twelve-month earnings (from 30 September 2018) of US$151m has jumped 48% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 34%, indicating the rate at which ORBK is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is solely owing to an industry uplift, or if Orbotech has seen some company-specific growth.
In terms of returns from investment, Orbotech has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 11% exceeds the US Electronic industry of 6.0%, indicating Orbotech has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Orbotech’s debt level, has increased over the past 3 years from 9.5% to 14%.
What does this mean?
Though Orbotech’s past data is helpful, it is only one aspect of my investment thesis. While Orbotech has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Orbotech to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ORBK’s future growth? Take a look at our free research report of analyst consensus for ORBK’s outlook.
- Financial Health: Are ORBK’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 email@example.com.