Analyzing Balchem Corporation’s (NASDAQ:BCPC) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess BCPC’s recent performance announced on 31 December 2018 and compare these figures to its long-term trend and industry movements.
Was BCPC weak performance lately part of a long-term decline?
BCPC’s trailing twelve-month earnings (from 31 December 2018) of US$79m has declined by -13% 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 15%, indicating the rate at which BCPC is growing has slowed down. What could be happening here? Let’s examine what’s occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Balchem has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 8.8% exceeds the US Chemicals industry of 7.2%, indicating Balchem has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Balchem’s debt level, has increased over the past 3 years from 12% to 12%.
What does this mean?
Though Balchem’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Balchem to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BCPC’s future growth? Take a look at our free research report of analyst consensus for BCPC’s outlook.
- Financial Health: Are BCPC’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.
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