When Caltex Australia Limited (ASX:CTX) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Caltex Australia performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see CTX has performed. See our latest analysis for Caltex Australia
Commentary On CTX’s Past Performance
I use data from the most recent 12 months, 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 technique allows me to analyze different stocks on a similar basis, using the latest information. For Caltex Australia, its most recent trailing-twelve-month earnings is AU$619.09M, which, in comparison to the previous year’s level, Since these values may be somewhat nearsighted, I’ve created an annualized five-year figure for Caltex Australia’s earnings, which stands at AU$210.56M This means generally, Caltex Australia has been able to grow its earnings over the past couple of years.
What’s the driver of this growth? Let’s take a look at if it is merely a result of an industry uplift, or if Caltex Australia has experienced some company-specific growth. In the last few years, Caltex Australia expanded bottom-line, while its top-line fell, by effectively managing its costs. This has led to to a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian oil and gas industry has been amplifying growth, more than doubling average earnings in the prior year, and a substantial 14.10% over the last five years. This shows that any tailwind the industry is enjoying, Caltex Australia has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Caltex Australia gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Caltex Australia to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for CTX’s future growth? Take a look at our free research report of analyst consensus for CTX’s outlook.
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2. Financial Health: Is CTX’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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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.