After reading Kimball International, Inc.’s (NasdaqGS:KBAL) most recent earnings announcement (30 June 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Kimball International’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Commentary On KBAL’s Past Performance
KBAL’s trailing twelve-month earnings (from 30 June 2019) of US$39m has jumped 14% 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 32%, indicating the rate at which KBAL is growing has slowed down. To understand what’s happening, let’s look at what’s occurring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Kimball International has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 10% exceeds the US Commercial Services industry of 6.5%, indicating Kimball International has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Kimball International’s debt level, has declined over the past 3 years from 24% to 23%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.07% to 0.07% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Kimball International gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Kimball International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KBAL’s future growth? Take a look at our free research report of analyst consensus for KBAL’s outlook.
- Financial Health: Are KBAL’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 June 2019. This may not be consistent with full year annual report figures.
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