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Does Kronos Worldwide Inc’s (NYSE:KRO) Past Performance Indicate A Weaker Future?

Today I will take a look at Kronos Worldwide Inc’s ( NYSE:KRO ) most recent earnings update (30 June 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the chemicals industry performed. As an investor, I find it beneficial to assess KRO’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.

View our latest analysis for Kronos Worldwide

Was KRO’s weak performance lately a part of a long-term decline?

KRO’s trailing twelve-month earnings (from 30 June 2018) of US$270m has declined by -3.3% 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 55%, indicating the rate at which KRO is growing has slowed down. Why is this? Let’s examine what’s transpiring with margins and whether the rest of the industry is feeling the heat.

NYSE:KRO Income Statement Export October 30th 18

In terms of returns from investment, Kronos Worldwide has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Chemicals industry of 7.9%, indicating Kronos Worldwide has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Kronos Worldwide’s debt level, has increased over the past 3 years from 9.2% to 25%.

What does this mean?

Kronos Worldwide’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 unpredictable earnings, can have many factors affecting its business. You should continue to research Kronos Worldwide to get a more holistic view of the stock by looking at:

  1. Future Outlook : What are well-informed industry analysts predicting for KRO’s future growth? Take a look at our free research report of analyst consensus for KRO’s outlook.
  2. Financial Health : Are KRO’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 2018. This may not be consistent with full year annual report figures.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com .