In this article, I will take a look at II-VI Incorporated's (NASDAQ:IIVI) most recent earnings update (30 September 2018) and compare these latest figures against its performance over the past few years, along with how the rest of IIVI's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Check out our latest analysis for II-VI
How Did IIVI's Recent Performance Stack Up Against Its Past?
IIVI's trailing twelve-month earnings (from 30 September 2018) of US$93m has declined by -7.1% 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 16%, indicating the rate at which IIVI is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, II-VI has fallen short of achieving a 20% return on equity (ROE), recording 8.9% instead. However, its return on assets (ROA) of 6.0% exceeds the US Electronic industry of 5.5%, indicating II-VI has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for II-VI’s debt level, has declined over the past 3 years from 9.3% to 9.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 32% to 54% over the past 5 years.
What does this mean?
II-VI's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research II-VI to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for IIVI’s future growth? Take a look at our free research report of analyst consensus for IIVI’s outlook.
- Financial Health: Are IIVI’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 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.