Examining Global Digital Creations Holdings Limited’s (SEHK:8271) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 8271’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements. View our latest analysis for Global Digital Creations Holdings

Did 8271’s recent earnings growth beat the long-term trend and the industry?

I prefer to 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 enables me to examine different stocks on a similar basis, using the most relevant data points. For Global Digital Creations Holdings, its latest earnings (trailing twelve month) is -HK$29.29M, which, against the previous year’s figure, has become less negative. Given that these values may be somewhat short-term thinking, I’ve computed an annualized five-year figure for Global Digital Creations Holdings’s earnings, which stands at HK$1.14M.

We can further analyze Global Digital Creations Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Global Digital Creations Holdings’s top-line has increased by a mere 7.60%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the HK media industry has been growing its average earnings by double-digit 12.16% in the prior year, . This is a change from a volatile drop of -10.13% in the past couple of years. This means although Global Digital Creations Holdings is currently loss-making, it may have only just been aided by the recent industry expansion, moving earnings towards to right direction.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Global Digital Creations Holdings may be facing and whether management guidance has steadily been met in the past. You should continue to research Global Digital Creations Holdings to get a more holistic view of the stock by looking at:

1. Financial Health: Is 8271’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. 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 31 December 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.