After reading Global Cord Blood Corporation’s (NYSE:CO) latest earnings update (30 June 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether CO has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Did CO beat its long-term earnings growth trend and its industry?
CO’s trailing twelve-month earnings (from 30 June 2018) of CN¥242m has jumped 42% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 18%, indicating the rate at which CO is growing has accelerated. What’s enabled this growth? Let’s see whether it is solely a result of an industry uplift, or if Global Cord Blood has experienced some company-specific growth.
In terms of returns from investment, Global Cord Blood has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. Furthermore, its return on assets (ROA) of 3.6% is below the US Healthcare industry of 6.5%, indicating Global Cord Blood’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Global Cord Blood’s debt level, has declined over the past 3 years from 5.8% to 5.3%.
What does this mean?
Though Global Cord Blood’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Global Cord Blood gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Global Cord Blood to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CO’s future growth? Take a look at our free research report of analyst consensus for CO’s outlook.
- Financial Health: Are CO’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 firstname.lastname@example.org.