For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Clarkson PLC (LSE:CKN) useful as an attempt to give more color around how Clarkson is currently performing. See our latest analysis for Clarkson
How Did CKN’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to examine different companies on a similar basis, using the latest information. For Clarkson, its most recent bottom-line (trailing twelve month) is UK£31.40M, which compared to the prior year’s level, has declined by -12.05%. Since these figures may be relatively short-term thinking, I’ve estimated an annualized five-year figure for Clarkson’s net income, which stands at UK£22.40M This shows that even though earnings growth was negative against the previous year, in the long run, Clarkson’s profits have been rising on average.How has it been able to do this? Let’s take a look at if it is solely because of industry tailwinds, or if Clarkson has experienced some company-specific growth. The ascend in earnings seems to be propelled by a solid top-line increase outpacing its growth rate of expenses. Though this brought about a margin contraction, it has made Clarkson more profitable. Eyeballing growth from a sector-level, the UK shipping industry has been growing, albeit, at a subdued single-digit rate of 9.22% over the past year, and 4.12% over the past five years. This shows that any uplift the industry is profiting from, Clarkson has not been able to leverage it as much as its average peer.
What does this mean?
Though Clarkson’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I recommend you continue to research Clarkson to get a more holistic view of the stock by looking at:
- 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.
- Financial Health: Is 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.
- 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.