Assessing Hebron Technology Co Ltd.’s (NASDAQ:HEBT) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess HEBT’s recent performance announced on 30 June 2017 and evaluate these figures to its long-term trend and industry movements. View our latest analysis for Hebron Technology
Was HEBT’s recent earnings decline indicative of a tough track record?
I look at 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 technique enables me to examine many different companies in a uniform manner using the most relevant data points. For Hebron Technology, its most recent bottom-line (trailing twelve month) is US$3.45M, which, against last year’s figure, has declined by a significant -30.82%. Given that these values may be fairly short-term, I’ve created an annualized five-year figure for HEBT’s earnings, which stands at US$3.73M This doesn’t seem to paint a better picture, as earnings seem to have gradually been diminishing over time.
Why could this be happening? Let’s examine what’s going on with margins and whether the entire industry is feeling the heat. Over the past few years, revenue growth has fallen behind which indicates that Hebron Technology’s bottom line has been driven by unmaintainable cost-reductions. Scanning growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 21.54% over the past year, and a more subdued 3.85% over the previous five years. This means that any tailwind the industry is enjoying, Hebron Technology has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Hebron Technology’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that face an extended period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. I suggest you continue to research Hebron Technology to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is HEBT’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 30 June 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.