Yahoo Finance Should You Be Happy With Centurion Corporation Limited’s (SGX:OU8) Performance Lately?
When Centurion Corporation Limited (SGX:OU8) announced its most recent earnings (31 March 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Centurion performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see OU8 has performed. Check out our latest analysis for Centurion
Did OU8 perform better than its track record and industry?
OU8’s trailing twelve-month earnings (from 31 March 2018) of S$30.13m has increased by 0.20% compared to the previous year. However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.61%, indicating the rate at which OU8 is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and if the entire industry is experiencing the hit as well.
Revenue growth over the last couple of years, has been positive, however, earnings growth has been lagging behind meaning Centurion has been increasing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the SG real estate industry has been growing, albeit, at a unexciting single-digit rate of 2.36% in the previous twelve months, . This is a turnaround from a volatile drop of -2.65% in the past few years. This shows that any headwind the industry is facing, it’s hitting Centurion harder than its peers.
In terms of returns from investment, Centurion has not invested its equity funds well, leading to a 7.47% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 4.29% exceeds the SG Real Estate industry of 3.67%, indicating Centurion has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Centurion’s debt level, has declined over the past 3 years from 7.17% to 4.49%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 73.34% to 134.47% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook.
You should continue to research Centurion to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for OU8’s future growth? Take a look at our free research report of analyst consensus for OU8’s outlook.
Financial Health: Is OU8’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 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.
