Understanding how Yulong Eco-Materials Limited (NASDAQ:YECO) 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 Yulong Eco-Materials is doing by comparing its latest earnings with its long-term trend as well as the performance of its basic materials industry peers. View our latest analysis for Yulong Eco-Materials
How YECO fared against its long-term earnings performance and its industry
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to examine many different companies on a similar basis, using the latest information. For Yulong Eco-Materials, its most recent trailing-twelve-month earnings is -US$7.43M, which, against last year’s level, has become less negative. Since these figures may be somewhat short-term, I have created an annualized five-year value for Yulong Eco-Materials’s net income, which stands at -US$6.94M. This means that, Yulong Eco-Materials has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further examine Yulong Eco-Materials’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Yulong Eco-Materials has seen an annual decline in revenue of -11.02%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US basic materials industry has been growing, albeit, at a unexciting single-digit rate of 6.11% over the previous twelve months, and a substantial 11.50% over the past half a decade. This shows that, while Yulong Eco-Materials is currently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Yulong Eco-Materials’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Yulong Eco-Materials may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Yulong Eco-Materials to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is YECO’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.
- 2. Valuation: What is YECO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether YECO is currently mispriced by the market.
- 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 June 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.