Measuring Laboratory Corporation of America Holdings’s (NYSE:LH) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess LH’s recent performance announced on 31 December 2019 and compare these figures to its historical trend and industry movements.
Despite a decline, did LH underperform the long-term trend and the industry?
LH’s trailing twelve-month earnings (from 31 December 2019) of US$824m has declined by -6.8% 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 17%, indicating the rate at which LH is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Laboratory Corporation of America Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 5.8% exceeds the US Healthcare industry of 5.3%, indicating Laboratory Corporation of America Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Laboratory Corporation of America Holdings’s debt level, has declined over the past 3 years from 11% to 9.5%.