Yahoo Movies Should You Be Concerned With Tennant Company’s (NYSE:TNC) -19% Earnings Drop?
Examining how Tennant Company (NYSE:TNC) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Tennant is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its machinery industry peers.
See our latest analysis for Tennant
Commentary On TNC’s Past Performance
TNC’s trailing twelve-month earnings (from 30 June 2018) of US$16m has declined by -19% 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 -22%, indicating the rate at which TNC is growing has slowed down. What could be happening here? Well, let’s look at what’s occurring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Tennant has fallen short of achieving a 20% return on equity (ROE), recording 5.5% instead. Furthermore, its return on assets (ROA) of 3.8% is below the US Machinery industry of 7.1%, indicating Tennant’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Tennant’s debt level, has declined over the past 3 years from 20% to 5.6%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 13% to 119% over the past 5 years.
What does this mean?
Though Tennant’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that endure an extended period of reduction in earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I recommend you continue to research Tennant to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for TNC’s future growth? Take a look at our free research report of analyst consensus for TNC’s outlook.
Financial Health: Are TNC’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 June 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.
