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Understanding how Franklin Electric Co., Inc. (NASDAQ:FELE) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Franklin Electric is doing by comparing its latest earnings with its long-term trend as well as the performance of its machinery industry peers.
Did FELE’s recent earnings growth beat the long-term trend and the industry?
FELE’s trailing twelve-month earnings (from 31 March 2019) of US$93m has jumped 12% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.7%, indicating the rate at which FELE is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at whether it is only attributable to industry tailwinds, or if Franklin Electric has experienced some company-specific growth.
In terms of returns from investment, Franklin Electric has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 8.3% exceeds the US Machinery industry of 7.6%, indicating Franklin Electric has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Franklin Electric’s debt level, has increased over the past 3 years from 11% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 33% to 31% over the past 5 years.
What does this mean?
Franklin Electric’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Franklin Electric gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Franklin Electric to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FELE’s future growth? Take a look at our free research report of analyst consensus for FELE’s outlook.
- Financial Health: Are FELE’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 March 2019. 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 firstname.lastname@example.org. 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. Thank you for reading.