Today I will take a look at China Auto Logistics Inc’s (NASDAQ:CALI) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the specialty retail industry performed. As an investor, I find it beneficial to assess CALI’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for China Auto Logistics
How Well Did CALI Perform?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to analyze many different companies in a uniform manner using the most relevant data points. For China Auto Logistics, its latest earnings (trailing twelve month) is -US$1.29M, which compared to last year’s level, has become less negative. Given that these figures are fairly myopic, I’ve estimated an annualized five-year figure for CALI’s net income, which stands at -US$3.89M. This means even though net income is negative, it has become less negative over the years.
We can further assess China Auto Logistics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years China Auto Logistics’s revenue growth has been relatively unexciting, with an annual growth rate of -0.59%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the US specialty retail industry has been growing, albeit, at a muted single-digit rate of 8.22% over the previous twelve months, and 6.68% over the last five years. This suggests that, despite the fact that China Auto Logistics is presently running a loss, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though China Auto Logistics’s past data is helpful, it is only one aspect of my investment thesis. 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 China Auto Logistics may be facing and whether management guidance has regularly been met in the past. You should continue to research China Auto Logistics to get a better picture of the stock by looking at:
- Financial Health: Is CALI’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.
- 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.