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 CTT - Correios De Portugal, S.A. (ENXTLS:CTT) useful as an attempt to give more color around how CTT - Correios De Portugal is currently performing.
Did CTT's recent earnings growth beat the long-term trend and the industry?
CTT's trailing twelve-month earnings (from 30 June 2019) of €21m has jumped 25% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -28%, indicating the rate at which CTT is growing has accelerated. What's enabled this growth? Let's see if it is only because of industry tailwinds, or if CTT - Correios De Portugal has experienced some company-specific growth.
In terms of returns from investment, CTT - Correios De Portugal has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 1.0% is below the PT Logistics industry of 3.7%, indicating CTT - Correios De Portugal's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for CTT - Correios De Portugal’s debt level, has declined over the past 3 years from 16% to 9.6%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 1.5% to 125% over the past 5 years.
What does this mean?
CTT - Correios De Portugal's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There may be variables that are influencing the entire industry hence the high industry growth rate over the same time frame. You should continue to research CTT - Correios De Portugal to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CTT’s future growth? Take a look at our free research report of analyst consensus for CTT’s outlook.
- Financial Health: Are CTT’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 2019. 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 firstname.lastname@example.org. 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.