When Croda International Plc (LON:CRDA) announced its most recent earnings (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Croda International has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see CRDA has performed.
Did CRDA’s recent earnings growth beat the long-term trend and the industry?
CRDA’s trailing twelve-month earnings (from 30 June 2018) of UK£244m has jumped 14% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.0%, indicating the rate at which CRDA is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is solely a result of an industry uplift, or if Croda International has seen some company-specific growth.
In terms of returns from investment, Croda International has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 14% exceeds the GB Chemicals industry of 7.5%, indicating Croda International has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Croda International’s debt level, has declined over the past 3 years from 28% to 22%.
What does this mean?
Croda International’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Croda International gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Croda International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CRDA’s future growth? Take a look at our free research report of analyst consensus for CRDA’s outlook.
- Financial Health: Are CRDA’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.