After looking at BMC Stock Holdings Inc’s (NASDAQ:BMCH) latest earnings update (31 March 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for BMC Stock Holdings
How BMCH fared against its long-term earnings performance and its industry
I look at data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to assess different stocks on a similar basis, using the latest information. For BMC Stock Holdings, its most recent earnings (trailing twelve month) is US$69.04M, which, in comparison to the previous year’s level, has escalated by a significant 66.84%. Since these figures may be fairly short-term, I’ve computed an annualized five-year value for BMC Stock Holdings’s net income, which stands at US$28.87M This suggests that, on average, BMC Stock Holdings has been able to steadily raise its profits over the past couple of years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is merely a result of an industry uplift, or if BMC Stock Holdings has experienced some company-specific growth. The rise in earnings seems to be driven by a substantial top-line increase beating its growth rate of costs. Though this brought about a margin contraction, it has made BMC Stock Holdings more profitable. Viewing growth from a sector-level, the US trade distributors industry has been growing its average earnings by double-digit 28.45% in the previous twelve months, and a more subdued 6.14% over the past five. This suggests that any uplift the industry is benefiting from, BMC Stock Holdings is capable of leveraging this to its advantage.
What does this mean?
Though BMC Stock Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as BMC Stock Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research BMC Stock Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BMCH’s future growth? Take a look at our free research report of analyst consensus for BMCH’s outlook.
- Financial Health: Is BMCH’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 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.