For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on NVE Corporation (NASDAQ:NVEC) useful as an attempt to give more color around how NVE is currently performing.
View our latest analysis for NVE
How Did NVEC’s Recent Performance Stack Up Against Its Past?
NVEC’s trailing twelve-month earnings (from 31 December 2018) of US$16m has jumped 19% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.3%, indicating the rate at which NVEC is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is only due to an industry uplift, or if NVE has seen some company-specific growth.
In terms of returns from investment, NVE has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 16% exceeds the US Semiconductor industry of 9.7%, indicating NVE has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for NVE’s debt level, has increased over the past 3 years from 18% to 22%.
What does this mean?
Though NVE’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as NVE gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research NVE to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NVEC’s future growth? Take a look at our free research report of analyst consensus for NVEC’s outlook.
- Financial Health: Are NVEC’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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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.