Yahoo Finance Should You Be Concerned With Clipper Logistics plc's (LON:CLG) -7.4% Earnings Drop?
Understanding how Clipper Logistics plc (LSE:CLG) 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 Clipper Logistics is doing by comparing its latest earnings with its long-term trend as well as the performance of its commercial services industry peers.
See our latest analysis for Clipper Logistics
Was CLG's recent earnings decline indicative of a tough track record?
CLG's trailing twelve-month earnings (from 31 October 2019) of UK£14m has declined by -7.4% 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 15%, indicating the rate at which CLG is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Clipper Logistics has invested its equity funds well leading to a 57% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 5.1% exceeds the GB Commercial Services industry of 4.9%, indicating Clipper Logistics has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Clipper Logistics’s debt level, has declined over the past 3 years from 32% to 9.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 82% to 140% over the past 5 years.
What does this mean?
Though Clipper Logistics's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Clipper Logistics to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CLG’s future growth? Take a look at our free research report of analyst consensus for CLG’s outlook.
Financial Health: Are CLG’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 31 October 2019. This may not be consistent with full year annual report figures.
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.
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