Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Tantech Holdings Ltd’s (NASDAQ:TANH) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View out our latest analysis for Tantech Holdings
How Did TANH’s Recent Performance Stack Up Against Its Past?
TANH’s trailing twelve-month earnings (from 31 December 2017) of US$3.74m has declined by -43.49% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -16.74%, indicating the rate at which TANH is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and if the entire industry is facing the same headwind.
Although revenue growth in the last couple of years, has been negative, earnings growth has been falling by even more, implying that Tantech Holdings has been growing its expenses. This harms margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the US chemicals industry has been growing its average earnings by double-digit 16.49% in the past twelve months, and a more muted 6.32% over the last five years. This means that any tailwind the industry is benefiting from, Tantech Holdings has not been able to reap as much as its industry peers.
In terms of returns from investment, Tantech Holdings has not invested its equity funds well, leading to a 2.72% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.08% is below the US Chemicals industry of 6.91%, indicating Tantech Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Tantech Holdings’s debt level, has declined over the past 3 years from 27.96% to 4.04%.
What does this mean?
Though Tantech Holdings’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a prolonged period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I recommend you continue to research Tantech Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TANH’s future growth? Take a look at our free research report of analyst consensus for TANH’s outlook.
- Financial Health: Is TANH’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 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.