Investors with a long-term horizong may find it valuable to assess Energy International Investments Holdings Limited’s (SEHK:353) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Energy International Investments Holdings is currently performing. See our latest analysis for Energy International Investments Holdings

Did 353 beat its long-term earnings growth trend and its 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 technique enables me to examine various companies on a similar basis, using the most relevant data points. For Energy International Investments Holdings, its most recent earnings (trailing twelve month) is -HK$167.3M, which compared to the prior year’s level, has become less negative. Since these values may be fairly short-term thinking, I have created an annualized five-year value for 353’s earnings, which stands at -HK$287.7M. This means while net income is negative, it has become less negative over the years.

We can further assess Energy International Investments Holdings’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past couple of years has been negative at -19.80%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the HK oil and gas industry has been multiplying average earnings growth of 54.48% over the past twelve months, . This is a a strong turnaround from a volatile drop of -4.80% in the past couple of years. This means though Energy International Investments Holdings is presently unprofitable, it may have only just benefited from the recent industry expansion, moving earnings into a more favorable position.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Energy International Investments Holdings may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Energy International Investments Holdings to get a better picture of the stock by looking at: