Measuring CorVel Corporation’s (NASDAQ:CRVL) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess CRVL’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for CorVel
Did CRVL’s recent EPS Growth beat the long-term trend and the industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to examine different stocks on a more comparable basis, using new information. For CorVel, the most recent earnings is $32.2M, which, against the previous year’s figure, has climbed up by 15.84%. Since these values may be somewhat short-term thinking, I have estimated an annualized five-year value for CorVel’s net income, which stands at $28.5M. This means that, generally, CorVel has been able to consistently improve its bottom line over the past few years as well.
What’s enabled this growth? Let’s take a look at whether it is solely attributable to an industry uplift, or if CorVel has seen some company-specific growth. The rise in earnings seems to be supported by a strong top-line increase outpacing its growth rate of expenses. Though this has led to a margin contraction, it has made CorVel more profitable. Scanning growth from a sector-level, the US healthcare industry has been growing, albeit, at a unexciting single-digit rate of 8.58% over the previous year, and 9.60% over the previous five years. This suggests that any tailwind the industry is gaining from, CorVel is able to leverage this to its advantage.
What does this mean?
CorVel’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? You should continue to research CorVel to get a better picture 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 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.