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When Conduril – Engenharia SA. (ENXTLS:CDU) released its most recent earnings update (31 December 2016), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Conduril – Engenharia has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see CDU has performed. Check out our latest analysis for Conduril – Engenharia
Was CDU’s weak performance lately a part of a long-term decline?
I 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 blend allows me to assess many different companies on a similar basis, using new information. For Conduril – Engenharia, its most recent trailing-twelve-month earnings is €4.24M, which compared to the prior year’s level, has fallen by a substantial -31.07%. Given that these values are somewhat short-term thinking, I have estimated an annualized five-year figure for CDU’s earnings, which stands at €20.00M This doesn’t look much better, as earnings seem to have gradually been falling over time.
Why is this? Let’s examine what’s occurring with margins and whether the entire industry is facing the same headwind. Although revenue growth in the last few years, has been negative, earnings growth has been deteriorating by even more, suggesting that Conduril – Engenharia has been ramping up its expenses. This harms margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the PT construction industry has been growing, albeit, at a muted single-digit rate of 7.07% over the previous year, and 4.15% over the past half a decade. This means that whatever uplift the industry is profiting from, Conduril – Engenharia has not been able to leverage it as much as its average peer.
What does this mean?
Conduril – Engenharia’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Typically companies that experience a prolonged period of decline in earnings are going through some sort of reinvestment phase in order to keep up with the latest industry disruption and expansion. I recommend you continue to research Conduril – Engenharia to get a more holistic view of the stock by looking at: