PCM Inc’s (NASDAQ:PCMI) Earnings Grew 33%, Did It Beat Long-Term Trend?

When PCM Inc’s (NASDAQ:PCMI) announced its latest earnings (30 September 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were PCM’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not PCMI actually performed well. Below is a quick commentary on how I see PCMI has performed.

View our latest analysis for PCM

How Did PCMI’s Recent Performance Stack Up Against Its Past?

PCMI’s trailing twelve-month earnings (from 30 September 2018) of US$14m has jumped 33% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.8%, indicating the rate at which PCMI is growing has accelerated. How has it been able to do this? Let’s see if it is only a result of an industry uplift, or if PCM has experienced some company-specific growth.

NasdaqGM:PCMI Income Statement Export November 28th 18
NasdaqGM:PCMI Income Statement Export November 28th 18

In terms of returns from investment, PCM has fallen short of achieving a 20% return on equity (ROE), recording 9.5% instead. Furthermore, its return on assets (ROA) of 3.3% is below the US Electronic industry of 5.9%, indicating PCM’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for PCM’s debt level, has increased over the past 3 years from 2.5% to 18%.

What does this mean?

PCM’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research PCM to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for PCMI’s future growth? Take a look at our free research report of analyst consensus for PCMI’s outlook.
  2. Financial Health: Are PCMI’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.
  3. 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.