Analyzing CIRCOR International Inc’s (NYSE:CIR) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess CIR’s recent performance announced on 31 December 2017 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for CIRCOR International
Did CIR’s recent earnings growth beat the long-term trend and the industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to examine various companies on a more comparable basis, using the latest information. For CIRCOR International, its latest trailing-twelve-month earnings is US$11.79M, which compared to the prior year’s figure, has jumped up by 16.71%. Since these values are fairly nearsighted, I have calculated an annualized five-year value for CIR’s net income, which stands at US$29.82M This means that, even though earnings growth from last year was positive, over the long run, CIRCOR International’s earnings have been deteriorating on average.
Why could this be happening? Well, let’s look at what’s transpiring with margins and if the whole industry is experiencing the hit as well. Although revenue growth in the past few years, has been negative, earnings growth has been falling by even more, suggesting that CIRCOR International has been growing its expenses. This hurts margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 24.42% in the previous year, and a less exciting 4.68% over the past half a decade. This means that any uplift the industry is profiting from, CIRCOR International has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are affecting the industry as a whole, thus the high industry growth rate over the same period of time. You should continue to research CIRCOR International to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for CIR’s future growth? Take a look at our free research report of analyst consensus for CIR’s outlook.
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Financial Health: Is CIR’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 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.