Measuring Highway Holdings Limited’s (NASDAQ:HIHO) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess HIHO’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Highway Holdings
How Did HIHO’s Recent Performance Stack Up Against Its Past?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze different stocks on a similar basis, using the most relevant data points. For Highway Holdings, the most recent twelve-month earnings is $1M, which compared to last year’s level, has escalated by a substantial 54.47%. Given that these figures may be fairly short-term thinking, I’ve created an annualized five-year figure for Highway Holdings’s earnings, which stands at $1M. This means on average, Highway Holdings has been able to gradually grow its net income over the past couple of years as well.
What’s the driver of this growth? Let’s see whether it is solely due to industry tailwinds, or if Highway Holdings has seen some company-specific growth. In the past few years, though bottom-line growth has seen a decrease, top-line growth has fallen at a faster rate, leading to a margin expansion and Highway Holdings still maintaining profitability. Eyeballing growth from a sector-level, the US machinery industry has been growing, albeit, at a unexciting single-digit rate of 7.47% in the past year, and 5.20% over the previous few years. This shows that any uplift the industry is benefiting from, Highway Holdings is able to leverage this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Highway Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Highway Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is HIHO’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. Valuation: What is HIHO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HIHO is currently mispriced by the market.
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.