After reading C&C Group plc’s (ISE:GCC) latest earnings update (28 February 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether GCC has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Was GCC’s weak performance lately a part of a long-term decline?
GCC’s trailing twelve-month earnings (from 28 February 2019) of €72m has declined by -9.2% 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 8.8%, indicating the rate at which GCC is growing has slowed down. Why is this? Well, let’s look at what’s transpiring with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, C&C Group has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 5.9% exceeds the IE Beverage industry of 5.4%, indicating C&C Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for C&C Group’s debt level, has increased over the past 3 years from 9.5% to 10%.
What does this mean?
Though C&C Group’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. I suggest you continue to research C&C Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GCC’s future growth? Take a look at our free research report of analyst consensus for GCC’s outlook.
- Financial Health: Are GCC’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.
- 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 28 February 2019. This may not be consistent with full year annual report figures.
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