Today I will examine CBIZ, Inc.'s (NYSE:CBZ) latest earnings update (31 March 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of CBZ's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Did CBZ beat its long-term earnings growth trend and its industry?
CBZ's trailing twelve-month earnings (from 31 March 2019) of US$63m has increased by 2.4% 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 19%, indicating the rate at which CBZ is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, CBIZ has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 5.1% is below the US Professional Services industry of 6.5%, indicating CBIZ's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for CBIZ’s debt level, has declined over the past 3 years from 8.9% to 7.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 55% to 56% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research CBIZ to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CBZ’s future growth? Take a look at our free research report of analyst consensus for CBZ’s outlook.
- Financial Health: Are CBZ’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 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 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.