For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on CWT Limited (SGX:C14) useful as an attempt to give more color around how CWT is currently performing. See our latest analysis for CWT
Commentary On C14’s Past Performance
I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to assess many different companies on a more comparable basis, using the latest information. “For CWT, its “, most recent bottom-line is SGD114.4M, which, in comparison to last year’s level, has jumped up by 32.65%. Given that these figures are somewhat myopic, I’ve computed an annualized five-year value for CWT’s net income, which stands at SGD101.5M. This means on average, CWT has been able to increasingly raise its earnings over the last couple of years as well.
What’s enabled this growth? Let’s take a look at if it is only attributable to an industry uplift, or if CWT has seen some company-specific growth. In the last few years, CWT top-line expansion has outstripped earnings and the growth rate of expenses. Though this resulted in a margin contraction, it has cushioned CWT’s earnings contraction. Eyeballing growth from a sector-level, the SG trade distributors industry has been growing, albeit, at a unexciting single-digit rate of 8.95% in the prior twelve months, . This is a change from a volatile drop of -4.31% in the last few years. This shows that, in the recent industry expansion, CWT is able to leverage this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research CWT to get a more holistic view of the stock by looking at:
1. Financial Health: Is C14’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.