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Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Cheetah Mobile Inc.'s (NYSE:CMCM) 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.
Despite a decline, did CMCM underperform the long-term trend and the industry?
CMCM's trailing twelve-month earnings (from 31 December 2018) of CN¥1.1b has declined by -15% 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 67%, indicating the rate at which CMCM is growing has slowed down. Why is this? Well, let's look at what's occurring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Cheetah Mobile has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 13% exceeds the US Software industry of 6.1%, indicating Cheetah Mobile has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Cheetah Mobile’s debt level, has declined over the past 3 years from 8.3% to 7.4%.
What does this mean?
Cheetah Mobile'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 volatile earnings, can have many factors impacting its business. You should continue to research Cheetah Mobile to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CMCM’s future growth? Take a look at our free research report of analyst consensus for CMCM’s outlook.
- Financial Health: Are CMCM’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 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.