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In this commentary, I will examine Clover Corporation Limited’s (ASX:CLV) latest earnings update (31 January 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the chemicals industry performed. As an investor, I find it beneficial to assess CLV’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Clover
Commentary On CLV’s Past Performance
I prefer to 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 method allows me to examine different stocks on a similar basis, using the latest information. For Clover, its most recent earnings (trailing twelve month) is AU$5.80M, which, against last year’s figure, has escalated by more than double. Since these values may be fairly myopic, I’ve estimated an annualized five-year figure for Clover’s earnings, which stands at AU$2.98M This means that, on average, Clover has been able to increasingly improve its earnings over the last couple of years as well.
What’s the driver of this growth? Let’s see if it is merely attributable to industry tailwinds, or if Clover has experienced some company-specific growth. Over the past couple of years, Clover top-line expansion has outpaced earnings and the growth rate of expenses. Though this brought about a margin contraction, it has lessened Clover’s earnings contraction. Scanning growth from a sector-level, the Australian chemicals industry has been enduring some headwinds over the past twelve months, leading to an average earnings drop of -24.78%. This is a momentous change, given that the industry has constantly been delivering a a robust growth of 15.87% in the previous five years. This means that whatever recent headwind the industry is experiencing, Clover is less exposed compared to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Clover gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Clover 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 CLV’s future growth? Take a look at our free research report of analyst consensus for CLV’s outlook.
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Financial Health: Is CLV’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 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.