Has Earnest Investments Holdings Limited (HKG:339) Improved Earnings Growth In Recent Times?
Measuring Earnest Investments Holdings Limited’s (SEHK:339) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 339’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Earnest Investments Holdings
Commentary On 339’s Past Performance
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 method enables me to examine different stocks on a more comparable basis, using the latest information. For Earnest Investments Holdings, its most recent earnings (trailing twelve month) is -HK$6.59M, which compared to last year’s figure, has become less negative. Given that these values are relatively nearsighted, I have computed an annualized five-year value for Earnest Investments Holdings’s net income, which stands at -HK$6.29M. This means that, Earnest Investments Holdings has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further evaluate Earnest Investments Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Earnest Investments Holdings has seen an annual decline in revenue of -17.66%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the HK capital markets industry has been growing, albeit, at a unexciting single-digit rate of 9.73% in the previous twelve months, and a substantial 11.22% over the past half a decade. This shows that, though Earnest Investments Holdings is currently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Earnest Investments Holdings may be facing and whether management guidance has steadily been met in the past. You should continue to research Earnest Investments Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is 339’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.
