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Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at EPI (Holdings) Limited’s (SEHK:689) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for EPI (Holdings)
How Did 689’s Recent Performance Stack Up Against Its Past?
I like to 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 technique allows me to analyze many different companies in a uniform manner using new information. For EPI (Holdings), its most recent bottom-line (trailing twelve month) is -HK$63.51M, which, in comparison to the prior year’s figure, has become less negative. Given that these values are somewhat nearsighted, I have determined an annualized five-year figure for EPI (Holdings)’s earnings, which stands at -HK$818.76M. This means that, while net income is negative, it has become less negative over the years.
We can further assess EPI (Holdings)’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years EPI (Holdings) has seen an annual decline in revenue of -52.00%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the HK oil and gas industry has been growing its average earnings by double-digit 18.37% in the previous twelve months, and a less exciting 3.82% over the past five years. This means even though EPI (Holdings) is currently running a loss, it may have benefited from industry tailwinds, moving earnings towards to right direction.
What does this mean?
EPI (Holdings)’s track record can be a valuable insight into its earnings performance, but it certainly 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 assess company-specific issues EPI (Holdings) may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research EPI (Holdings) to get a more holistic view of the stock by looking at:
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1. Financial Health: Is 689’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.
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2. Valuation: What is 689 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 689 is currently mispriced by the market.
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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 trailing twelve months from 30 June 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.