After reading mDR LIMITED’s (SGX:A27) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for mDR

How Did A27’s Recent Performance Stack Up Against Its Past?

To account for any quarterly or half-yearly updates, I 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 allows me to examine various companies on a similar basis, using the most relevant data points. For mDR, its most recent bottom-line (trailing twelve month) is S$4.54M, which compared to the previous year’s figure, has escalated by a significant 54.49%. Given that these figures may be somewhat myopic, I have determined an annualized five-year value for A27’s earnings, which stands at S$2.33M This suggests that, on average, mDR has been able to gradually improve its net income over the last couple of years as well.

How has it been able to do this? Let’s see if it is solely due to an industry uplift, or if mDR has seen some company-specific growth. Though both top-line and bottom-line growth rates in the last few years, were, on average, negative, earnings were more so. While this has caused a margin contraction, it has softened mDR’s earnings contraction. Viewing growth from a sector-level, the SG electronic industry has been increasing average earnings growth of 54.60% over the previous twelve months, and a less exciting 5.43% over the past five years. This shows that any tailwind the industry is profiting from, mDR has not been able to leverage it as much as its industry peers.

What does this mean?

Though mDR’s past data is helpful, it is only one aspect of my investment thesis. While mDR has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research mDR to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.