Today I will examine Century Legend (Holdings) Limited’s (SEHK:79) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of 79’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Century Legend (Holdings)

How Did 79’s Recent Performance Stack Up Against Its Past?

I look at 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 blend allows me to assess different companies on a more comparable basis, using new information. For Century Legend (Holdings), its latest twelve-month earnings is -HK$15.1M, which, relative to the prior year’s figure, has become less negative. Since these figures are fairly short-term thinking, I’ve estimated an annualized five-year figure for 79’s earnings, which stands at HK$4.1M.

Additionally, we can evaluate Century Legend (Holdings)’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the last few years has been relatively unexciting, remaining flat on average at 1.21%. Given that top-line growth is also pretty stale the key to profitability moving forward would be controlling costs. Looking at growth from a sector-level, the HK industrials industry has been growing its average earnings by double-digit 10.56% in the prior twelve months, . This is a turnaround from a volatile drop of -5.21% in the previous couple of years. This shows that, although Century Legend (Holdings) is presently unprofitable, it may have only just gained from the recent industry expansion, moving earnings towards to right direction.

What does this mean?

Century Legend (Holdings)’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 predict what will happen in the future and when. The most useful step is to examine company-specific issues Century Legend (Holdings) may be facing and whether management guidance has dependably been met in the past. You should continue to research Century Legend (Holdings) to get a more holistic view of the stock by looking at:

1. Financial Health: Is 79’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 79 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 79 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.