Examining Corby Spirit and Wine Limited’s (TSE:CSW.A) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CSW.A’s latest performance announced on 31 March 2018 and compare these figures to its longer term trend and industry movements. View out our latest analysis for Corby Spirit and Wine
Was CSW.A’s recent earnings decline indicative of a tough track record?
CSW.A’s trailing twelve-month earnings (from 31 March 2018) of CA$25.11m has declined by -4.46% 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 -7.92%, indicating the rate at which CSW.A is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well.
Although revenue growth over the last couple of years, has been negative, earnings growth has been falling by even more, suggesting that Corby Spirit and Wine has been ramping up its expenses. This hurts margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the Canadian beverage industry has been growing its average earnings by double-digit 24.02% in the past year, and a more subdued 3.17% over the past five. This shows that any uplift the industry is deriving benefit from, Corby Spirit and Wine has not been able to gain as much as its industry peers.
In terms of returns from investment, Corby Spirit and Wine has not invested its equity funds well, leading to a 14.28% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 10.86% exceeds the CA Beverage industry of 7.48%, indicating Corby Spirit and Wine has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Corby Spirit and Wine’s debt level, has increased over the past 3 years from 12.72% to 18.12%.
What does this mean?
Though Corby Spirit and Wine’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a drawn out period of reduction in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the latest industry disruption and growth. I recommend you continue to research Corby Spirit and Wine to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CSW.A’s future growth? Take a look at our free research report of analyst consensus for CSW.A’s outlook.
- Financial Health: Is CSW.A’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 March 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.