Does Canfor Pulp Products Inc.'s (TSE:CFX) Past Performance Indicate A Weaker Future?
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Assessing Canfor Pulp Products Inc.'s (TSE:CFX) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess CFX's latest performance announced on 31 March 2019 and evaluate these figures to its historical trend and industry movements.
View our latest analysis for Canfor Pulp Products
Was CFX weak performance lately part of a long-term decline?
CFX's trailing twelve-month earnings (from 31 March 2019) of CA$131m has declined by -8.0% 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 18%, indicating the rate at which CFX is growing has slowed down. What could be happening here? Let's examine what's going on with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Canfor Pulp Products has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 14% exceeds the CA Forestry industry of 6.1%, indicating Canfor Pulp Products has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Canfor Pulp Products’s debt level, has increased over the past 3 years from 19% to 23%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 12% to 4.4% over the past 5 years.
What does this mean?
Though Canfor Pulp Products's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Canfor Pulp Products to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CFX’s future growth? Take a look at our free research report of analyst consensus for CFX’s outlook.
Financial Health: Are CFX’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 editorial-team@simplywallst.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.
