Examining Crown Holdings Inc’s (NYSE:CCK) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CCK’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Crown Holdings
How Did CCK’s Recent Performance Stack Up Against Its Past?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to assess different stocks in a uniform manner using new information. For Crown Holdings, its most recent bottom-line (trailing twelve month) is US$323.00M, which, in comparison to the previous year’s level, has fallen by a significant -34.88%. Since these figures may be somewhat myopic, I have computed an annualized five-year value for CCK’s earnings, which stands at US$409.04M This doesn’t look much better, as earnings seem to have gradually been falling over time.
Why could this be happening? Well, let’s take a look at what’s going on with margins and if the entire industry is experiencing the hit as well. In the past couple of years, revenue growth has failed to keep up with earnings, which suggests that Crown Holdings’s bottom line has been propelled by unmaintainable cost-reductions. Inspecting growth from a sector-level, the US packaging industry has been growing, albeit, at a unexciting single-digit rate of 6.65% over the previous twelve months, and 5.18% over the previous five years. This means that whatever tailwind the industry is profiting from, Crown Holdings has not been able to gain as much as its industry peers.
What does this mean?
Though Crown Holdings’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that face a drawn out period of reduction in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I recommend you continue to research Crown Holdings to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for CCK’s future growth? Take a look at our free research report of analyst consensus for CCK’s outlook.
- 2. Financial Health: Is CCK’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.
- 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.