For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Clarkson PLC (LON:CKN) useful as an attempt to give more color around how Clarkson is currently performing.
Was CKN's recent earnings decline worse than the long-term trend and the industry?
CKN's trailing twelve-month earnings (from 31 December 2018) of UK£30m has declined by -5.1% 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 CKN is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Clarkson has fallen short of achieving a 20% return on equity (ROE), recording 7.5% instead. Furthermore, its return on assets (ROA) of 4.8% is below the GB Shipping industry of 5.7%, indicating Clarkson's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Clarkson’s debt level, has declined over the past 3 years from 10% to 9.6%.
What does this mean?
Clarkson's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I recommend you continue to research Clarkson to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CKN’s future growth? Take a look at our free research report of analyst consensus for CKN’s outlook.
- Financial Health: Are CKN’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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.