Understanding how ComfortDelGro Corporation Limited (SGX:C52) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how ComfortDelGro is doing by comparing its latest earnings with its long-term trend as well as the performance of its transportation industry peers.
Did C52's recent earnings growth beat the long-term trend and the industry?
C52's trailing twelve-month earnings (from 31 December 2018) of S$303m has increased by 0.6% 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 1.8%, indicating the rate at which C52 is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, ComfortDelGro has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 5.9% is below the SG Transportation industry of 7.7%, indicating ComfortDelGro's are utilized less efficiently. However, its return on capital (ROC), which also accounts for ComfortDelGro’s debt level, has increased over the past 3 years from 11% to 21%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 29% to 19% over the past 5 years.
What does this mean?
ComfortDelGro's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While ComfortDelGro has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research ComfortDelGro to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for C52’s future growth? Take a look at our free research report of analyst consensus for C52’s outlook.
- Financial Health: Are C52’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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