Understanding how Yintech Investment Holdings Limited (NASDAQ:YIN) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Yintech Investment Holdings is doing by comparing its latest earnings with its long-term trend as well as the performance of its capital markets industry peers. View our latest analysis for Yintech Investment Holdings
Was YIN’s recent earnings decline indicative of a tough track record?
I look at 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 method allows me to assess various companies on a more comparable basis, using the latest information. For Yintech Investment Holdings, its most recent bottom-line (trailing twelve month) is CN¥480.66M, which, against the previous year’s figure, has dropped by a significant -48.35%. Since these values are somewhat short-term, I have estimated an annualized five-year value for Yintech Investment Holdings’s earnings, which stands at CN¥643.38M This doesn’t seem to paint a better picture, since earnings seem to have consistently been deteriorating over time.
Why could this be happening? Well, let’s look at what’s occurring with margins and if the whole industry is feeling the heat. Revenue growth in the past couple of years, has been positive, however, earnings growth has fallen behind meaning Yintech Investment Holdings has been growing its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 15.24% in the past twelve months, and 10.85% over the past half a decade. This means any tailwind the industry is benefiting from, Yintech Investment Holdings has not been able to realize the gains unlike its industry peers.
What does this mean?
Yintech Investment Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Usually companies that endure a prolonged period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry disruption and growth. I suggest you continue to research Yintech Investment Holdings to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for YIN’s future growth? Take a look at our free research report of analyst consensus for YIN’s outlook.
- 2. Financial Health: Is YIN’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 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.