When CorVel Corporation (NASDAQ:CRVL) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how CorVel performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see CRVL has performed. Check out our latest analysis for CorVel
How Did CRVL’s Recent Performance Stack Up Against Its Past?
I prefer to use the ‘latest twelve-month’ data, 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 enables me to assess many different companies on a more comparable basis, using the latest information. For CorVel, its latest earnings (trailing twelve month) is US$34.72M, which, against the previous year’s level, has climbed up by 23.32%. Given that these values are somewhat myopic, I’ve computed an annualized five-year figure for CRVL’s earnings, which stands at US$28.84M This means that, on average, CorVel has been able to gradually improve its bottom line over the past few years as well.
What’s the driver of this growth? Let’s see if it is solely due to an industry uplift, or if CorVel has seen some company-specific growth. The climb in earnings seems to be propelled by a strong top-line increase outstripping its growth rate of costs. Though this brought about a margin contraction, it has made CorVel more profitable. Viewing growth from a sector-level, the US healthcare industry has been growing its average earnings by double-digit 10.81% over the previous twelve months, and a less exciting 9.94% over the past half a decade. This suggests that whatever uplift the industry is enjoying, CorVel is able to amplify this to its advantage.
What does this mean?
Though CorVel’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 CorVel to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is CRVL’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 CRVL 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 CRVL 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 trailing twelve months from 31 December 2017. 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.