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Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess CanWel Building Materials Group Ltd.'s (TSE:CWX) 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.
How Did CWX's Recent Performance Stack Up Against Its Past?
CWX's trailing twelve-month earnings (from 31 December 2018) of CA$30m has increased by 4.2% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 28%, indicating the rate at which CWX is growing has slowed down. To understand what's happening, let’s take a look at what’s going on with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, CanWel Building Materials Group has fallen short of achieving a 20% return on equity (ROE), recording 8.3% instead. Furthermore, its return on assets (ROA) of 5.1% is below the CA Trade Distributors industry of 5.4%, indicating CanWel Building Materials Group's are utilized less efficiently. However, its return on capital (ROC), which also accounts for CanWel Building Materials Group’s debt level, has increased over the past 3 years from 7.4% to 7.5%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 115% to 85% over the past 5 years.
What does this mean?
Though CanWel Building Materials Group's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as CanWel Building Materials Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research CanWel Building Materials Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CWX’s future growth? Take a look at our free research report of analyst consensus for CWX’s outlook.
- Financial Health: Are CWX’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 December 2018. 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 firstname.lastname@example.org. 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.