HNI Corporation’s (NYSE:HNI) Earnings Grew 5.0%, Did It Beat Long-Term Trend?

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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine HNI Corporation’s (NYSE:HNI) 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 HNI

How Did HNI’s Recent Performance Stack Up Against Its Past?

HNI’s trailing twelve-month earnings (from 30 March 2019) of US$92m has increased by 5.0% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.5%, indicating the rate at which HNI is growing has accelerated. What’s enabled this growth? Let’s see whether it is only due to industry tailwinds, or if HNI has seen some company-specific growth.

NYSE:HNI Income Statement, May 10th 2019
NYSE:HNI Income Statement, May 10th 2019

In terms of returns from investment, HNI has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 7.1% exceeds the US Commercial Services industry of 6.3%, indicating HNI has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for HNI’s debt level, has declined over the past 3 years from 22% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 43% to 69% over the past 5 years.

What does this mean?

Though HNI’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as HNI gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research HNI to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for HNI’s future growth? Take a look at our free research report of analyst consensus for HNI’s outlook.
  2. Financial Health: Are HNI’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.
  3. 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 30 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 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.