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After reading CL Educate Limited’s (NSE:CLEDUCATE) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
View our latest analysis for CL Educate
Was CLEDUCATE’s weak performance lately a part of a long-term decline?
CLEDUCATE’s trailing twelve-month earnings (from 31 December 2018) of ₹131m has declined by -3.3% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -20%, indicating the rate at which CLEDUCATE is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, CL Educate has fallen short of achieving a 20% return on equity (ROE), recording 4.0% instead. Furthermore, its return on assets (ROA) of 2.3% is below the IN Consumer Services industry of 2.8%, indicating CL Educate’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for CL Educate’s debt level, has declined over the past 3 years from 10% to 6.2%.
What does this mean?
Though CL Educate’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research CL Educate to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for CLEDUCATE’s future growth? Take a look at our free research report of analyst consensus for CLEDUCATE’s outlook.
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Financial Health: Are CLEDUCATE’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.
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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 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.