Understanding how Culp Inc (NYSE:CULP) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Culp is doing by comparing its latest earnings with its long-term trend as well as the performance of its luxury industry peers. Check out our latest analysis for Culp
How Did CULP’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I 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 allows me to examine various companies on a more comparable basis, using new information. For Culp, its most recent trailing-twelve-month earnings is US$14.41M, which compared to last year’s figure, has declined by -26.94%. Since these figures may be relatively short-term thinking, I’ve calculated an annualized five-year value for CULP’s net income, which stands at US$17.13M This doesn’t look much better, since earnings seem to have consistently been declining over time.
Why is this? Well, let’s take a look at what’s occurring with margins and whether the rest of the industry is feeling the heat. Revenue growth in the last few years, has been positive, however, earnings growth has failed to keep up meaning Culp has been ramping up its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the US luxury industry has been growing, albeit, at a muted single-digit rate of 7.19% in the prior year, and 4.67% over the past five years. This suggests that any tailwind the industry is benefiting from, Culp has not been able to realize the gains unlike its average peer.
What does this mean?
Culp’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that endure a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the latest industry disruption and expansion. You should continue to research Culp to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CULP’s future growth? Take a look at our free research report of analyst consensus for CULP’s outlook.
- Financial Health: Is CULP’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 28 January 2018. 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.