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Measuring Clarius Group Limited’s (ASX:CND) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CND’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Clarius Group
Did CND’s recent earnings growth beat the long-term trend and the industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to assess many different companies in a uniform manner using new information. For Clarius Group, its most recent trailing-twelve-month earnings is -AU$4.28M, which compared to the prior year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I have calculated an annualized five-year value for CND’s earnings, which stands at -AU$12.28M. This means although net income is negative, it has become less negative over the years.
We can further analyze Clarius Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Clarius Group has seen an annual decline in revenue of -9.75%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Australian professional services industry has been enduring some headwinds in the past year, leading to an average earnings drop of -2.34%. This is a momentous change, given that the industry has been delivering a positive rate of 3.29%, on average, over the past five years. This suggests that though Clarius Group is presently running a loss, whatever near-term headwind the industry is enduring, Clarius Group is less exposed compared to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most valuable step is to examine company-specific issues Clarius Group may be facing and whether management guidance has dependably been met in the past. You should continue to research Clarius Group to get a better picture of the stock by looking at:
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Financial Health: Is CND’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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Valuation: What is CND 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 CND is currently mispriced by the market.
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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.
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.