Investors with a long-term horizong may find it valuable to assess 21Vianet Group Inc’s (NASDAQ:VNET) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how 21Vianet Group is currently performing. See our latest analysis for 21Vianet Group
Were VNET’s earnings stronger than its past performances and the industry?
I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to assess various companies on a similar basis, using the latest information. For 21Vianet Group, its most recent bottom-line (trailing twelve month) is -CN¥772.73M, which, in comparison to the previous year’s figure, has become less negative. Since these values are somewhat nearsighted, I’ve estimated an annualized five-year value for 21Vianet Group’s earnings, which stands at -CN¥343.16M. This shows that, 21Vianet Group has historically performed better than recently, although it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate 21Vianet Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years 21Vianet Group’s top-line has increased by 20.44% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.78% over the past twelve months, and 16.35% over the previous five years. This means whatever tailwind the industry is deriving benefit from, 21Vianet Group has not been able to reap as much as its average peer.
What does this mean?
21Vianet Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most insightful step is to examine company-specific issues 21Vianet Group may be facing and whether management guidance has consistently been met in the past. You should continue to research 21Vianet Group to get a better picture of the stock by looking at:
- 1. Financial Health: Is VNET’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.
- 2. 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 December 2017. 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.