For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine VSE Corporation’s (NASDAQ:VSEC) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
See our latest analysis for VSE
Commentary On VSEC’s Past Performance
VSEC’s trailing twelve-month earnings (from 31 December 2018) of US$35m has declined by -10% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 14%, indicating the rate at which VSEC is growing has slowed down. Why is this? Well, let’s look at what’s occurring with margins and if the whole industry is feeling the heat.
In terms of returns from investment, VSE has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 6.9% is below the US Commercial Services industry of 7.1%, indicating VSE’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for VSE’s debt level, has increased over the past 3 years from 9.8% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 62% to 55% over the past 5 years.
What does this mean?
VSE’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I recommend you continue to research VSE to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for VSEC’s future growth? Take a look at our free research report of analyst consensus for VSEC’s outlook.
- Financial Health: Are VSEC’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.
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 editorial-team@simplywallst.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.