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After looking at Standex International Corporation’s (NYSE:SXI) latest earnings announcement (31 March 2019), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Did SXI’s recent earnings growth beat the long-term trend and the industry?
SXI’s trailing twelve-month earnings (from 31 March 2019) of US$51m has jumped 48% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.3%, indicating the rate at which SXI is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is merely attributable to an industry uplift, or if Standex International has experienced some company-specific growth.
In terms of returns from investment, Standex International has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 6.1% is below the US Machinery industry of 7.5%, indicating Standex International’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Standex International’s debt level, has declined over the past 3 years from 15% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 14% to 61% over the past 5 years.
What does this mean?
Standex International’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 Standex International gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Standex International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SXI’s future growth? Take a look at our free research report of analyst consensus for SXI’s outlook.
- Financial Health: Are SXI’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 email@example.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. Thank you for reading.