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After looking at Crest Nicholson Holdings plc’s (LON:CRST) latest earnings announcement (31 October 2018), 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 Crest Nicholson Holdings’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
See our latest analysis for Crest Nicholson Holdings
Commentary On CRST’s Past Performance
CRST’s trailing twelve-month earnings (from 31 October 2018) of UK£143m has declined by -15% 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 15%, indicating the rate at which CRST is growing has slowed down. Why is this? Well, let’s look at what’s occurring with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Crest Nicholson Holdings has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 9.8% is below the GB Consumer Durables industry of 11%, indicating Crest Nicholson Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Crest Nicholson Holdings’s debt level, has declined over the past 3 years from 17% to 16%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 18% to 19% over the past 5 years.
What does this mean?
Though Crest Nicholson Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. You should continue to research Crest Nicholson Holdings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for CRST’s future growth? Take a look at our free research report of analyst consensus for CRST’s outlook.
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Financial Health: Are CRST’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.
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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.