Measuring Cotiviti Holdings Inc’s (NYSE:COTV) track record of past performance is a useful exercise for investors. It enables 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 COTV’s recent performance announced on 31 March 2018 and weigh these figures against its long-term trend and industry movements. View out our latest analysis for Cotiviti Holdings
Did COTV’s recent earnings growth beat the long-term trend and the industry?COTV’s trailing twelve-month earnings (from 31 March 2018) of US$165.16m has more than doubled from US$48.85m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 66.26%, indicating the rate at which COTV is growing has accelerated. What’s the driver of this growth? Let’s take a look at whether it is only attributable to industry tailwinds, or if Cotiviti Holdings has experienced some company-specific growth.
In the past couple of years, Cotiviti Holdings expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the US healthcare services industry has been growing its average earnings by double-digit 25.92% in the prior year, and 17.99% over the past five years. This shows that any tailwind the industry is deriving benefit from, Cotiviti Holdings is capable of amplifying this to its advantage.In terms of returns from investment, Cotiviti Holdings has not invested its equity funds well, leading to a 14.11% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 9.51% exceeds the US Healthcare Services industry of 9.42%, indicating Cotiviti Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cotiviti Holdings’s debt level, has increased over the past 3 years from 2.80% to 8.69%.
What does this mean?
Cotiviti Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Cotiviti Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Cotiviti Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for COTV’s future growth? Take a look at our free research report of analyst consensus for COTV’s outlook.
- Financial Health: Is COTV’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.