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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 Vulcan Materials Company (NYSE:VMC) useful as an attempt to give more color around how Vulcan Materials is currently performing.
View our latest analysis for Vulcan Materials
Did VMC perform worse than its track record and industry?
VMC’s trailing twelve-month earnings (from 31 December 2018) of US$518m 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 35%, indicating the rate at which VMC is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Vulcan Materials has fallen short of achieving a 20% return on equity (ROE), recording 10.0% instead. Furthermore, its return on assets (ROA) of 6.7% is below the US Basic Materials industry of 7.1%, indicating Vulcan Materials’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Vulcan Materials’s debt level, has increased over the past 3 years from 6.9% to 7.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 64% to 56% over the past 5 years.
What does this mean?
Though Vulcan Materials’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 affecting its business. You should continue to research Vulcan Materials to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for VMC’s future growth? Take a look at our free research report of analyst consensus for VMC’s outlook.
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Financial Health: Are VMC’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.
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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. On rare occasion, data errors may occur. Thank you for reading.