Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Tarena International Inc’s (NASDAQ:TEDU) 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. Check out our latest analysis for Tarena International
Was TEDU weak performance lately part of a long-term decline?
I like to use data from the most recent 12 months, 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 examine many different companies on a similar basis, using the latest information. For Tarena International, its most recent bottom-line (trailing twelve month) is CN¥212.95M, which compared to the prior year’s level, has fallen by -7.47%. Since these values are fairly short-term, I’ve computed an annualized five-year figure for Tarena International’s net income, which stands at CN¥66.74M This shows that despite the fact that earnings declined from the previous year, over time, Tarena International’s earnings have been rising on average.
What’s enabled this growth? Let’s see whether it is merely due to industry tailwinds, or if Tarena International has experienced some company-specific growth. Over the past couple of years, Tarena International increased its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the US consumer services industry has been growing average earnings growth of 51.95% over the previous year, and a more muted 6.84% over the past half a decade. This shows that whatever uplift the industry is deriving benefit from, Tarena International has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research Tarena International to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TEDU’s future growth? Take a look at our free research report of analyst consensus for TEDU’s outlook.
- 2. Financial Health: Is TEDU’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.