JinkoSolar Holding Co Ltd’s (NYSE:JKS) Earnings Dropped -79.44%, Did Its Industry Show Weakness Too?
Today I will take a look at JinkoSolar Holding Co Ltd’s (NYSE:JKS) 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 semiconductor industry performed. As an investor, I find it beneficial to assess JKS’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 JinkoSolar Holding
Was JKS weak performance lately part of a long-term decline?
I prefer to 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 blend enables me to assess many different companies in a uniform manner using the most relevant data points. For JinkoSolar Holding, its latest trailing-twelve-month earnings is CN¥265.0M, which, relative to the previous year’s level, has plunged by a significant -79.44%. Since these values may be fairly myopic, I’ve calculated an annualized five-year figure for JKS’s earnings, which stands at CN¥277.7M. This doesn’t look much better, as earnings seem to have consistently been deteriorating over time.
Why is this? Well, let’s take a look at what’s occurring with margins and whether the rest of the industry is facing the same headwind. Revenue growth in the past couple of years, has been positive, however, earnings growth has failed to keep up meaning JinkoSolar Holding has been ramping up its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 30.95% over the prior twelve months, and a more muted 5.99% over the past five. This means any uplift the industry is profiting from, JinkoSolar Holding has not been able to reap as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. In some cases, companies that experience a drawn out period of decline in earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. I recommend you continue to research JinkoSolar Holding to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for JKS’s future growth? Take a look at our free research report of analyst consensus for JKS’s outlook.
2. Financial Health: Is JKS’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 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.
