After looking at Gencor Industries, Inc.’s (NASDAQ:GENC) latest earnings announcement (31 December 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 Gencor Industries’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
How Did GENC’s Recent Performance Stack Up Against Its Past?
GENC’s trailing twelve-month earnings (from 31 December 2018) of US$11m has jumped 12% 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 27%, indicating the rate at which GENC is growing has slowed down. To understand what’s happening, let’s take a look at what’s occurring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Gencor Industries has fallen short of achieving a 20% return on equity (ROE), recording 7.4% instead. Furthermore, its return on assets (ROA) of 5.7% is below the US Machinery industry of 7.7%, indicating Gencor Industries’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Gencor Industries’s debt level, has increased over the past 3 years from 1.7% to 9.7%.
What does this mean?
Gencor Industries’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Gencor Industries has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Gencor Industries to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GENC’s future growth? Take a look at our free research report of analyst consensus for GENC’s outlook.
- Financial Health: Are GENC’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.
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