After looking at ClearView Wealth Limited’s (ASX:CVW) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether ClearView Wealth’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for ClearView Wealth

Commentary On CVW’s Past Performance

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to analyze different companies on a more comparable basis, using the latest information. For ClearView Wealth, its most recent trailing-twelve-month earnings is AU$22.23M, which compared to last year’s level, has jumped up by 15.38%. Since these figures may be relatively myopic, I have determined an annualized five-year value for CVW’s earnings, which stands at AU$14.36M This suggests that, generally, ClearView Wealth has been able to consistently improve its bottom line over the past few years as well.

What’s enabled this growth? Well, let’s take a look at whether it is solely attributable to an industry uplift, or if ClearView Wealth has seen some company-specific growth. The rise in earnings seems to be propelled by a solid top-line increase overtaking its growth rate of expenses. Though this resulted in a margin contraction, it has made ClearView Wealth more profitable. Viewing growth from a sector-level, the Australian diversified financial industry has been growing, albeit, at a muted single-digit rate of 2.62% over the prior year, and 9.82% over the past half a decade. This shows that whatever recent headwind the industry is enduring, ClearView Wealth is less exposed compared to its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While ClearView Wealth has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research ClearView Wealth to get a better picture of the stock by looking at:

1. Financial Health: Is CVW’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 CVW 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 CVW 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.