Investors with a long-term horizong may find it valuable to assess Himax Technologies Inc’s (NASDAQ:HIMX) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Himax Technologies is currently performing. View our latest analysis for Himax Technologies
How Well Did HIMX Perform?
I prefer to use data from the most recent 12 months, 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 technique enables me to assess different companies on a more comparable basis, using the latest information. For Himax Technologies, its latest trailing-twelve-month earnings is US$8.86M, which, in comparison to last year’s level, has sunken by a substantial -83.16%. Since these values may be relatively nearsighted, I have computed an annualized five-year figure for Himax Technologies’s earnings, which stands at US$41.49M This doesn’t look much better, since earnings seem to have consistently been declining over the longer term.
Why is this? Well, let’s look at what’s transpiring with margins and whether the entire industry is facing the same headwind. Revenue growth in the past few years, has been positive, however, earnings growth has failed to keep up meaning Himax Technologies has been ramping up its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 11.57% over the prior twelve months, and a more subdued 7.63% over the last five years. This means that whatever tailwind the industry is profiting from, Himax Technologies has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Himax Technologies’s past data is helpful, it is only one aspect of my investment thesis. Generally companies that experience a prolonged period of decline in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the latest industry growth and disruption. I suggest you continue to research Himax Technologies to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for HIMX’s future growth? Take a look at our free research report of analyst consensus for HIMX’s outlook.
- 2. Financial Health: Is HIMX’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.