After looking at Cedar Woods Properties Limited's (ASX:CWP) latest earnings update (30 June 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.

View our latest analysis for Cedar Woods Properties

Did CWP beat its long-term earnings growth trend and its industry?

CWP's trailing twelve-month earnings (from 30 June 2019) of AU$49m has jumped 14% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.7%, indicating the rate at which CWP is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely owing to an industry uplift, or if Cedar Woods Properties has seen some company-specific growth.

In terms of returns from investment, Cedar Woods Properties has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 8.9% exceeds the AU Real Estate industry of 6.1%, indicating Cedar Woods Properties has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Cedar Woods Properties’s debt level, has declined over the past 3 years from 16% to 13%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 16% to 32% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Cedar Woods Properties has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Cedar Woods Properties to get a better picture of the stock by looking at:

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

2. Financial Health: Are CWP’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 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.