After looking at Chase Corporation’s (AMEX:CCF) latest earnings announcement (31 August 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Chase
How CCF fared against its long-term earnings performance and its industry
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to examine various companies on a more comparable basis, using the latest information. For Chase, the latest twelve-month earnings is $42M, which, in comparison to the previous year’s figure, has risen by 27.72%. Given that these figures may be fairly short-term thinking, I’ve estimated an annualized five-year value for Chase’s net income, which stands at $22M. This suggests that, on average, Chase has been able to gradually raise its net income over the past few years as well.
How has it been able to do this? Let’s see whether it is merely a result of an industry uplift, or if Chase has experienced some company-specific growth. In the past few years, Chase grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the US chemicals industry has been relatively flat in terms of earnings growth over the previous few years. This means whatever near-term headwind the industry is enduring, the impact on Chase has been softer relative to its peers.
What does this mean?
Though Chase’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Chase to get a more holistic view of the stock by looking at:
1. Financial Health: Is CCF’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.
2. Valuation: What is CCF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CCF is currently mispriced by the market.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.