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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Toromont Industries Ltd. (TSE:TIH) useful as an attempt to give more color around how Toromont Industries is currently performing.
See our latest analysis for Toromont Industries
How Did TIH’s Recent Performance Stack Up Against Its Past?
TIH’s trailing twelve-month earnings (from 31 December 2018) of CA$252m has jumped 43% 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 TIH is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is only owing to an industry uplift, or if Toromont Industries has experienced some company-specific growth.
In terms of returns from investment, Toromont Industries has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 8.5% exceeds the CA Trade Distributors industry of 5.8%, indicating Toromont Industries has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Toromont Industries’s debt level, has declined over the past 3 years from 21% to 18%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 23% to 49% over the past 5 years.
What does this mean?
Though Toromont Industries’s past data is helpful, it is only one aspect of my investment thesis. While Toromont Industries has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Toromont Industries to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TIH’s future growth? Take a look at our free research report of analyst consensus for TIH’s outlook.
- Financial Health: Are TIH’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 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. On rare occasion, data errors may occur. Thank you for reading.