With A -4.92% Earnings Drop, Did ComfortDelGro Corporation Limited (SGX:C52) Really Underperform?

March 09, 2018

Examining how ComfortDelGro Corporation Limited (SGX:C52) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how ComfortDelGro is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its transportation industry peers. See our latest analysis for ComfortDelGro

Was C52's recent earnings decline worse than the long-term trend and the industry?

I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to analyze different stocks in a uniform manner using the most relevant data points. For ComfortDelGro, its most recent bottom-line (trailing twelve month) is S$301.50M, which, in comparison to the prior year's figure, has fallen by -4.92%. Given that these values may be fairly short-term, I’ve calculated an annualized five-year figure for ComfortDelGro's earnings, which stands at S$276.20M This shows that though earnings growth was negative from the previous year, over a longer period of time, ComfortDelGro's profits have been increasing on average.

What's enabled this growth? Well, let’s take a look at if it is only because of industry tailwinds, or if ComfortDelGro has experienced some company-specific growth. Over the last couple of years, ComfortDelGro increased its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the SG transportation industry has been growing its average earnings by double-digit 19.45% in the prior year, and 10.52% over the past five. This shows that whatever tailwind the industry is deriving benefit from, ComfortDelGro has not been able to leverage it as much as its industry peers.

What does this mean?

ComfortDelGro'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 volatile earnings, can have many factors impacting its business. I suggest you continue to research ComfortDelGro to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for C52’s future growth? Take a look at our free research report of analyst consensus for C52’s outlook.
2. Financial Health: Is C52’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.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.