Assessing Century Communities, Inc.'s (NYSE:CCS) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CCS's recent performance announced on 30 June 2019 and evaluate these figures to its longer term trend and industry movements.
Was CCS's recent earnings decline indicative of a tough track record?
CCS's trailing twelve-month earnings (from 30 June 2019) of US$76m has declined by -4.8% 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 31%, indicating the rate at which CCS is growing has slowed down. Why could this be happening? Let's examine what's going on with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Century Communities has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 3.1% is below the US Consumer Durables industry of 7.1%, indicating Century Communities's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Century Communities’s debt level, has declined over the past 3 years from 6.9% to 6.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 55% to 135% over the past 5 years.
What does this mean?
Though Century Communities's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Century Communities to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CCS’s future growth? Take a look at our free research report of analyst consensus for CCS’s outlook.
- Financial Health: Are CCS’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 30 June 2019. This may not be consistent with full year annual report figures.
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