With A -9.0% Earnings Drop, Did CapitaLand Limited (SGX:C31) Really Underperform?

Measuring CapitaLand Limited’s (SGX:C31) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess C31’s recent performance announced on 30 June 2018 and compare these figures to its historical trend and industry movements.

View our latest analysis for CapitaLand

How Well Did C31 Perform?

C31’s trailing twelve-month earnings (from 30 June 2018) of S$1.5b has declined by -9.0% 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 14%, indicating the rate at which C31 is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is facing the same headwind.

SGX:C31 Income Statement Export November 14th 18
SGX:C31 Income Statement Export November 14th 18

In terms of returns from investment, CapitaLand has fallen short of achieving a 20% return on equity (ROE), recording 7.9% instead. Furthermore, its return on assets (ROA) of 3.1% is below the SG Real Estate industry of 3.6%, indicating CapitaLand’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for CapitaLand’s debt level, has declined over the past 3 years from 4.7% to 3.8%.

What does this mean?

Though CapitaLand’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 influencing its business. I suggest you continue to research CapitaLand to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for C31’s future growth? Take a look at our free research report of analyst consensus for C31’s outlook.
  2. Financial Health: Are C31’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 30 June 2018. This may not be consistent with full year annual report figures.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.