Examining Yirendai Ltd’s (NYSE:YRD) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess YRD’s latest performance announced on 30 September 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Yirendai
Could YRD beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess various companies on a similar basis, using new information. For Yirendai, the most recent earnings is CN¥1,303M, which, in comparison to last year’s figure, has climbed up by a significant 58.89%. Given that these values are relatively myopic, I’ve created an annualized five-year value for YRD’s net income, which stands at CN¥567M. This shows that, generally, Yirendai has been able to consistently grow its bottom line over the past couple of years as well.
What’s enabled this growth? Let’s see if it is only attributable to an industry uplift, or if Yirendai has experienced some company-specific growth. Over the past few years, Yirendai increased its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the US internet software and services industry has been growing its average earnings by double-digit 18.01% over the previous twelve months, and 22.48% over the past five. This shows that any tailwind the industry is gaining from, Yirendai is capable of leveraging this to its advantage.
What does this mean?
Yirendai’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Yirendai 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 Yirendai to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for YRD’s future growth? Take a look at our free research report of analyst consensus for YRD’s outlook.
2. Financial Health: Is YRD’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.