Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Chicago Rivet & Machine Co’s (NYSEMKT:CVR) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View out our latest analysis for Chicago Rivet & Machine
Commentary On CVR’s Past Performance
CVR’s trailing twelve-month earnings (from 31 March 2018) of US$2.28m has increased by 2.48% 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 5.83%, indicating the rate at which CVR is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and whether the entire industry is feeling the heat.
In the past few years, revenue growth has failed to keep up which indicates that Chicago Rivet & Machine’s bottom line has been driven by unsustainable cost-cutting. Inspecting growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 23.44% in the previous year, and a less exciting 4.62% over the last five years. This shows that any uplift the industry is deriving benefit from, Chicago Rivet & Machine has not been able to realize the gains unlike its industry peers.
In terms of returns from investment, Chicago Rivet & Machine has not invested its equity funds well, leading to a 7.83% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 6.71% exceeds the US Machinery industry of 5.76%, indicating Chicago Rivet & Machine has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Chicago Rivet & Machine’s debt level, has declined over the past 3 years from 10.15% to 8.75%.
What does this mean?
Chicago Rivet & Machine’s track record can be a valuable insight into its earnings performance, but it certainly 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 Chicago Rivet & Machine to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CVR’s future growth? Take a look at our free research report of analyst consensus for CVR’s outlook.
- Financial Health: Is CVR’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 2018. 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.