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Assessing Quest Diagnostics Incorporated’s (NYSE:DGX) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess DGX’s recent performance announced on 31 December 2018 and evaluate these figures to its long-term trend and industry movements.
View our latest analysis for Quest Diagnostics
Was DGX’s recent earnings decline indicative of a tough track record?
DGX’s trailing twelve-month earnings (from 31 December 2018) of US$733m has declined by -4.7% 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 3.5%, indicating the rate at which DGX is growing has slowed down. Why could this be happening? Let’s examine what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Quest Diagnostics has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 8.2% exceeds the US Healthcare industry of 6.6%, indicating Quest Diagnostics has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Quest Diagnostics’s debt level, has declined over the past 3 years from 14% to 13%.
What does this mean?
Though Quest Diagnostics’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Quest Diagnostics to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DGX’s future growth? Take a look at our free research report of analyst consensus for DGX’s outlook.
- Financial Health: Are DGX’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.