When Yintech Investment Holdings Limited (NASDAQ:YIN) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Yintech Investment Holdings 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 YIN has performed. View our latest analysis for Yintech Investment Holdings
Could YIN beat the long-term trend and outperform its industry?
I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to analyze different companies in a uniform manner using new information. For Yintech Investment Holdings, its most recent trailing-twelve-month earnings is CN¥873.6M, which, against last year’s figure, has climbed up by 36.38%. Since these values are fairly short-term, I’ve computed an annualized five-year figure for YIN’s earnings, which stands at CN¥658.2M. This suggests that, generally, Yintech Investment Holdings has been able to consistently raise its net income over the past couple of years as well.
What’s the driver of this growth? Let’s see whether it is solely due to an industry uplift, or if Yintech Investment Holdings has seen some company-specific growth. The hike in earnings seems to be driven by a strong top-line increase overtaking its growth rate of costs. Though this resulted in a margin contraction, it has made Yintech Investment Holdings more profitable. Viewing growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 17.00% in the prior year, and 10.45% over the previous five years. This means whatever tailwind the industry is benefiting from, Yintech Investment Holdings is able to leverage this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Yintech Investment Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Yintech Investment Holdings to get a more holistic view of the stock by looking at:
1. Financial Health: Is YIN’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. Valuation: What is YIN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether YIN is currently mispriced by the market.
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 September 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.