When Kimball International, Inc. (NASDAQ:KBAL) released its most recent earnings update (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Kimball International performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see KBAL has performed.
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How Well Did KBAL Perform?
KBAL’s trailing twelve-month earnings (from 31 March 2019) of US$38m has jumped 11% 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 34%, indicating the rate at which KBAL is growing has slowed down. To understand what’s happening, let’s look at what’s transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Kimball International has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 11% exceeds the US Commercial Services industry of 6.5%, indicating Kimball International has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Kimball International’s debt level, has declined over the past 3 years from 25% to 23%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.07% to 0.08% over the past 5 years.
What does this mean?
Though Kimball International’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Kimball International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KBAL’s future growth? Take a look at our free research report of analyst consensus for KBAL’s outlook.
- Financial Health: Are KBAL’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.
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