Measuring CVC Limited’s (ASX:CVC) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess CVC’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for CVC

Did CVC’s recent earnings growth beat the long-term trend and the industry?

I 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 blend enables me to analyze different stocks on a similar basis, using the latest information. For CVC, its most recent bottom-line (trailing twelve month) is AU$27.06M, which, in comparison to the prior year’s level, has escalated by an impressive 75.21%. Since these values are fairly short-term, I have calculated an annualized five-year value for CVC’s net income, which stands at AU$14.03M This suggests that, on average, CVC has been able to steadily grow its net income over the last few years as well.

How has it been able to do this? Well, let’s take a look at if it is solely a result of an industry uplift, or if CVC has seen some company-specific growth. Over the past few years, CVC increased its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the Australian capital markets industry has been growing, albeit, at a muted single-digit rate of 8.71% over the previous twelve months, and a substantial 15.23% over the last five years. This suggests that any uplift the industry is gaining from, CVC is able to leverage this to its advantage.

What does this mean?

CVC’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as CVC gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research CVC to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is CVC’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.

• 2. Valuation: What is CVC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CVC is currently mispriced by the market.

• 3. 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.