Measuring American Railcar Industries Inc’s (NASDAQ:ARII) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess ARII’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for American Railcar Industries
How Did ARII’s Recent Performance Stack Up Against Its Past?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to analyze different companies on a more comparable basis, using the most relevant data points. For American Railcar Industries, its latest trailing-twelve-month earnings is US$52.61M, which compared to the prior year’s level, has sunken by a non-trivial -39.20%. Since these values may be somewhat short-term, I have calculated an annualized five-year value for American Railcar Industries’s net income, which stands at US$69.01M This doesn’t seem to paint a better picture, as earnings seem to have steadily been diminishing over time.Why could this be happening? Let’s examine what’s going on with margins and whether the whole industry is experiencing the hit as well. In the past few years, revenue growth has been lagging behind which implies that American Railcar Industries’s bottom line has been propelled by unsustainable cost-cutting. Eyeballing growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 18.72% over the prior twelve months, and a more subdued 3.72% over the past five. This shows that whatever tailwind the industry is benefiting from, American Railcar Industries has not been able to gain as much as its average peer.
What does this mean?
Though American Railcar Industries’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that endure an extended period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. I recommend you continue to research American Railcar Industries to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for ARII’s future growth? Take a look at our free research report of analyst consensus for ARII’s outlook.
- 2. Financial Health: Is ARII’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.
- 3. 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.