Measuring Core-Mark Holding Company Inc’s (NASDAQ:CORE) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess CORE’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Core-Mark Holding Company
Despite a decline, did CORE underperform the long-term trend and the industry?
CORE’s trailing twelve-month earnings (from 31 March 2018) of US$30.10m has declined by -40.51% 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 8.25%, indicating the rate at which CORE is growing has slowed down. Why is this? Let’s examine what’s going on with margins and whether the rest of the industry is experiencing the hit as well.
Revenue growth over the last couple of years, has been positive, however, earnings growth has not been able to catch up, meaning Core-Mark Holding Company has been increasing its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the US retail distributors industry has been relatively flat in terms of earnings growth over the past couple of years. This means that whatever near-term headwind the industry is facing, it’s hitting Core-Mark Holding Company harder than its peers.
In terms of returns from investment, Core-Mark Holding Company has not invested its equity funds well, leading to a 5.52% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 2.58% is below the US Retail Distributors industry of 6.21%, indicating Core-Mark Holding Company’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Core-Mark Holding Company’s debt level, has declined over the past 3 years from 13.57% to 2.59%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 13.61% to 88.63% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Typically companies that endure an extended period of reduction in earnings are going through some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a indicator of a structural shift, which makes Core-Mark Holding Company and its peers a riskier investment. I suggest you continue to research Core-Mark Holding Company to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CORE’s future growth? Take a look at our free research report of analyst consensus for CORE’s outlook.
- Financial Health: Is CORE’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.