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Does China Online Education Group’s (COE) 73% EPS Growth Reflect The Long-Term Trend?

Brad Riley

Investors with a long-term horizong may find it valuable to assess China Online Education Group’s (NYSE:COE) 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 China Online Education Group is currently performing. Check out our latest analysis for China Online Education Group

How Did COE’s Recent Performance Stack Up Against Its Past?

For the most up-to-date info, 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 allows me to assess various companies on a similar basis, using the latest information. China Online Education Group’s most recent twelve-month earnings -CN¥557.0M, which, relative to the prior year’s level, has become less negative. Given that these figures may be fairly short-term thinking, I’ve computed an annualized five-year figure for China Online Education Group’s earnings, which stands at -CN¥427.5M. This suggests that, China Online Education Group has historically performed better than recently, while it seems like earnings are now heading back in the right direction again.

NYSE:COE Income Statement Dec 4th 17

Additionally, we can examine China Online Education Group’s loss by researching what has been happening in the industry on top of within the company. Initially, I want to quickly look into the line items. Revenue growth over last couple of years has increased by 62.33%, indicating that China Online Education Group is in a high-growth period with expenses racing ahead elevated top-line growth rates. Inspecting growth from a sector-level, the US diversified consumer services industry has been growing its average earnings by double-digit 28.32% in the previous year, and 13.80% over the previous five years. This suggests that whatever uplift the industry is enjoying, China Online Education Group has not been able to gain as much as its industry peers.

What does this mean?

China Online Education 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 hard to forecast what will happen in the future and when. The most insightful step is to assess company-specific issues China Online Education Group may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research China Online Education Group to get a better picture of the stock by looking at:

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

2. Financial Health: Is COE’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.