In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Examining Cineplex Inc.'s (TSE:CGX) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CGX's latest performance announced on 31 March 2019 and weigh these figures against its longer term trend and industry movements.
Check out our latest analysis for Cineplex
Was CGX weak performance lately part of a long-term decline?
CGX's trailing twelve-month earnings (from 31 March 2019) of CA$54m has declined by -13% 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 -4.1%, indicating the rate at which CGX is growing has slowed down. Why is this? Well, let's look at what's transpiring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Cineplex has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 3.1% is below the CA Entertainment industry of 7.0%, indicating Cineplex's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Cineplex’s debt level, has declined over the past 3 years from 12% to 4.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 51% to 97% over the past 5 years.
What does this mean?
Cineplex's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Typically companies that endure a prolonged period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry growth and disruption. I suggest you continue to research Cineplex to get a more holistic view of the stock by looking at:
-
Financial Health: Are CGX’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.
-
Valuation: What is CGX 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 CGX is currently mispriced by the market.
-
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.