Yahoo Finance Should You Be Concerned With Croda International Plc's (LON:CRDA) -6.1% Earnings Drop?
Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Croda International Plc's (LSE:CRDA) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for Croda International
Was CRDA's weak performance lately a part of a long-term decline?
CRDA's trailing twelve-month earnings (from 31 December 2019) of UK£224m has declined by -6.1% 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 7.8%, indicating the rate at which CRDA is growing has slowed down. Why is this? Let's examine what's transpiring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Croda International has invested its equity funds well leading to a 26% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the GB Chemicals industry of 6.9%, indicating Croda International has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Croda International’s debt level, has declined over the past 3 years from 23% to 21%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 46% to 67% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I recommend you continue to research Croda International to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CRDA’s future growth? Take a look at our free research report of analyst consensus for CRDA’s outlook.
Financial Health: Are CRDA’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 December 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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