Analyzing Evergreen Products Group Limited’s (SEHK:1962) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess 1962’s recent performance announced on 30 June 2017 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for Evergreen Products Group

Did 1962 perform worse than its track record and industry?

I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to analyze different companies in a uniform manner using new information. For Evergreen Products Group, its most recent trailing-twelve-month earnings is HK$44.82M, which, in comparison to the previous year’s level, has fallen by -12.01%. Given that these values are relatively nearsighted, I’ve estimated an annualized five-year figure for Evergreen Products Group’s earnings, which stands at HK$51.14M This doesn’t look much better, since earnings seem to have consistently been falling over time.

Why is this? Well, let’s take a look at what’s occurring with margins and whether the rest of the industry is facing the same headwind. Revenue growth over the last couple of years, has been positive, yet earnings growth has been declining. This implies that Evergreen Products Group has been increasing expenses, which is hurting margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the HK personal products industry has been enduring some headwinds over the previous few years, leading to an average earnings drop of -26.56% in the most recent year. This suggests that whatever recent headwind the industry is experiencing, Evergreen Products Group is less exposed compared to its peers.

What does this mean?

Evergreen Products Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Usually companies that face a drawn out period of decline in earnings are undergoing some sort of reinvestment phase Although, if the entire industry is struggling to grow over time, it may be a indicator of a structural change, which makes Evergreen Products Group and its peers a higher risk investment. I suggest you continue to research Evergreen Products Group to get a better picture of the stock by looking at: