Clarkson PLC (LON:CKN): Does The -5.1% Earnings Drop Reflect A Longer Term Trend?

Assessing Clarkson PLC’s (LON:CKN) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess CKN’s latest performance announced on 31 December 2018 and evaluate these figures to its historical trend and industry movements.

Check out our latest analysis for Clarkson

How Did CKN’s Recent Performance Stack Up Against Its Past?

CKN’s trailing twelve-month earnings (from 31 December 2018) of UK£30m has declined by -5.1% 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 17%, indicating the rate at which CKN is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and whether the entire industry is facing the same headwind.

LSE:CKN Income Statement, April 7th 2019
LSE:CKN Income Statement, April 7th 2019

In terms of returns from investment, Clarkson has fallen short of achieving a 20% return on equity (ROE), recording 7.5% instead. Furthermore, its return on assets (ROA) of 4.8% is below the GB Shipping industry of 6.0%, indicating Clarkson’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Clarkson’s debt level, has declined over the past 3 years from 10% to 9.6%.

What does this mean?

Clarkson’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Clarkson to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CKN’s future growth? Take a look at our free research report of analyst consensus for CKN’s outlook.
  2. Financial Health: Are CKN’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 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.