Does Cellnet Group Limited’s (ASX:CLT) Past Performance Indicate A Stronger Future?

Simply Wall St June 21, 2018

Examining Cellnet Group Limited’s (ASX:CLT) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CLT’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. Check out our latest analysis for Cellnet Group

Commentary On CLT’s Past Performance

CLT’s trailing twelve-month earnings (from 31 December 2017) of AU$2.76m has jumped 72.75% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 15.18%, indicating the rate at which CLT is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is only owing to industry tailwinds, or if Cellnet Group has seen some company-specific growth.

Over the last couple of years, Cellnet Group expanded its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian electronic industry has been growing its average earnings by double-digit 18.76% in the past year, and 24.37% over the last five years. This means that any tailwind the industry is gaining from, Cellnet Group is capable of amplifying this to its advantage.

ASX:CLT Income Statement June 21st 18
ASX:CLT Income Statement June 21st 18
In terms of returns from investment, Cellnet Group has not invested its equity funds well, leading to a 15.84% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 8.83% exceeds the AU Electronic industry of 8.40%, indicating Cellnet Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cellnet Group’s debt level, has increased over the past 3 years from 0.46% to 17.72%.

What does this mean?

Cellnet Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Cellnet Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Cellnet Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CLT’s future growth? Take a look at our free research report of analyst consensus for CLT’s outlook.
  2. Financial Health: Is CLT’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.
  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.