Measuring Yirendai Ltd’s (NYSE:YRD) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess YRD’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Yirendai
Did YRD’s recent earnings growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I 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 technique enables me to examine different companies on a similar basis, using the most relevant data points. For Yirendai, its latest trailing-twelve-month earnings is CN¥1.30B, which, in comparison to the prior year’s level, has escalated by a substantial 58.89%. Since these figures are somewhat short-term thinking, I’ve calculated an annualized five-year value for Yirendai’s earnings, which stands at CN¥573.93M This means that, generally, Yirendai has been able to increasingly improve its profits over the last few years as well.
What’s enabled this growth? Well, let’s take a look at whether it is merely attributable to an industry uplift, or if Yirendai has seen some company-specific growth. In the past couple of years, Yirendai increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the US consumer finance industry has been growing, albeit, at a unexciting single-digit rate of 4.65% in the previous year, and 9.01% over the past five years. This shows that whatever near-term headwind the industry is enduring, the impact on Yirendai has been softer relative to its peers.
What does this mean?
Though Yirendai’s past data is helpful, it is only one aspect of my investment thesis. While Yirendai has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Yirendai to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for YRD’s future growth? Take a look at our free research report of analyst consensus for YRD’s outlook.
- 2. Financial Health: Is YRD’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.