Should Balchem Corporation's (NASDAQ:BCPC) Recent Earnings Decline Worry You?
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Balchem Corporation's (NASDAQ:BCPC) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Check out our latest analysis for Balchem
Did BCPC perform worse than its track record and industry?
BCPC's trailing twelve-month earnings (from 31 March 2019) of US$78m has declined by -17% 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 14%, indicating the rate at which BCPC is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Balchem has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 8.8% exceeds the US Chemicals industry of 7.1%, indicating Balchem has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Balchem’s debt level, has increased over the past 3 years from 10% to 12%.
What does this mean?
Balchem'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 influencing its business. I suggest you continue to research Balchem to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BCPC’s future growth? Take a look at our free research report of analyst consensus for BCPC’s outlook.
Financial Health: Are BCPC’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 March 2019. 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. Thank you for reading.
