Examining how Great World Company Holdings Ltd (SEHK:8003) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Great World Company Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. See our latest analysis for Great World Company Holdings

Did 8003 beat its long-term earnings growth trend and its industry?

I 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 blend enables me to examine various companies in a uniform manner using the most relevant data points. For Great World Company Holdings, its most recent earnings (trailing twelve month) is -HK$14.3M, which compared to the prior year’s figure, has become less negative. Since these values may be relatively short-term, I have determined an annualized five-year value for Great World Company Holdings’s net income, which stands at -HK$17.6M. This shows that, though net income is negative, it has become less negative over the years.

Additionally, we can evaluate Great World Company Holdings’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has increased by 60.27%, implying that Great World Company Holdings is in a high-growth phase with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Inspecting growth from a sector-level, the HK metals and mining industry has been increasing growth, more than doubling average earnings in the previous twelve months, . This is a a strong change from a volatile drop of -15.80% in the past few years. This means that whatever tailwind the industry is enjoying, Great World Company Holdings has not been able to gain as much as its average peer.

What does this mean?

Though Great World Company Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Great World Company Holdings may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Great World Company Holdings to get a more holistic view of the stock by looking at:

1. Financial Health: Is 8003’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 8003 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 8003 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 trailing twelve months from 30 September 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.