With -27.2% EPS Drop, Should Crown Crafts Inc’s (undefined:CRWS) Recent Track Record Be A Cause Of Concern?
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 Crown Crafts Inc’s (NASDAQ:CRWS) 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. Check out our latest analysis for Crown Crafts
Was CRWS’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze many different companies on a more comparable basis, using new information. For Crown Crafts, the most recent bottom-line is $4.7M, which, relative to last year’s figure, has fallen by -26.88%. Given that these figures are somewhat myopic, I have computed an annualized five-year figure for CRWS’s earnings, which stands at $5.5M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been declining over the longer term.
Why is this? Well, let’s take a look at what’s occurring with margins and if the whole industry is experiencing the hit as well. In the past few years, revenue growth has not been able to keep up with, earnings, which suggests that Crown Crafts’s bottom line has been driven by unsustainable cost-cutting. Looking at growth from a sector-level, the US luxury industry has been growing, albeit, at a muted single-digit rate of 7.24% over the past twelve months, and 6.14% over the past five. This means that whatever uplift the industry is deriving benefit from, Crown Crafts has not been able to leverage it as much as its average peer.
What does this mean?
Though Crown Crafts’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that endure a drawn out period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry expansion and disruption. I suggest you continue to research Crown Crafts to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CRWS’s future growth? Take a look at our free research report of analyst consensus for CRWS’s outlook.
2. Financial Health: Is CRWS’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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
