Analyzing CorVel Corporation’s (NASDAQ:CRVL) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess CRVL’s recent performance announced on 30 June 2018 and compare these figures to its long-term trend and industry movements.
Could CRVL beat the long-term trend and outperform its industry?
CRVL’s trailing twelve-month earnings (from 30 June 2018) of US$38.7m has jumped 25.8% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.9%, indicating the rate at which CRVL is growing has accelerated. How has it been able to do this? Let’s take a look at if it is solely attributable to an industry uplift, or if CorVel has seen some company-specific growth.
The ascend in earnings seems to be propelled by a robust top-line increase outpacing its growth rate of costs. Though this has caused a margin contraction, it has made CorVel more profitable.
Scanning growth from a sector-level, the US healthcare industry has been growing its average earnings by double-digit 15.9% in the past twelve months, and 10.5% over the past five. This growth is a median of profitable companies of 25 Healthcare companies in US including Cardinal Health, LifePoint Health and Diplomat Pharmacy. This means that any tailwind the industry is profiting from, CorVel is capable of amplifying this to its advantage.
In terms of returns from investment, CorVel has invested its equity funds well leading to a 21.3% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13.3% exceeds the US Healthcare industry of 6.6%, indicating CorVel has used its assets more efficiently. However, its return on capital (ROC), which also accounts for CorVel’s debt level, has declined over the past 3 years from 30.1% to 26.4%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as CorVel gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research CorVel to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CRVL’s future growth? Take a look at our free research report of analyst consensus for CRVL’s outlook.
- Financial Health: Are CRVL’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 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.