Yahoo News With A -7.9% Earnings Drop, Did Collins Foods Limited (ASX:CKF) Really Underperform?
Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Collins Foods Limited's (ASX:CKF) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for Collins Foods
Was CKF weak performance lately part of a long-term decline?
CKF's trailing twelve-month earnings (from 13 October 2019) of AU$38m has declined by -7.9% 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 32%, indicating the rate at which CKF is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Collins Foods has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 5.1% is below the AU Hospitality industry of 7.6%, indicating Collins Foods's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Collins Foods’s debt level, has declined over the past 3 years from 14% to 7.5%.
What does this mean?
Collins Foods'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 impacting its business. I suggest you continue to research Collins Foods to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CKF’s future growth? Take a look at our free research report of analyst consensus for CKF’s outlook.
Financial Health: Are CKF’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 13 October 2019. This may not be consistent with full year annual report figures.
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.
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