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Understanding how William Lyon Homes (NYSE:WLH) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how William Lyon Homes is doing by comparing its latest earnings with its long-term trend as well as the performance of its consumer durables industry peers.
Did WLH beat its long-term earnings growth trend and its industry?
WLH’s trailing twelve-month earnings (from 31 March 2019) of US$91m has jumped 38% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -9.1%, indicating the rate at which WLH is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is only owing to industry tailwinds, or if William Lyon Homes has experienced some company-specific growth.
In terms of returns from investment, William Lyon Homes has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 3.2% is below the US Consumer Durables industry of 7.1%, indicating William Lyon Homes’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for William Lyon Homes’s debt level, has increased over the past 3 years from 4.6% to 6.0%.
What does this mean?
William Lyon Homes’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 William Lyon Homes gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research William Lyon Homes to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WLH’s future growth? Take a look at our free research report of analyst consensus for WLH’s outlook.
- Financial Health: Are WLH’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 firstname.lastname@example.org. 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.