When Forise International Limited (SGX:I5H) released its most recent earnings update (31 March 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Forise International performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see I5H has performed. See our latest analysis for Forise International
Was I5H’s recent earnings decline indicative of a tough track record?
I prefer to use 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 stocks on a similar basis, using the latest information. For Forise International, its most recent bottom-line (trailing twelve month) is CN¥1.75M, which, in comparison to the prior year’s figure, has fallen by a large -99.40%. Given that these figures may be relatively nearsighted, I’ve created an annualized five-year figure for I5H’s net income, which stands at -CN¥5.96M This shows that despite the fact that earnings growth was negative against last year, over the longer term, Forise International’s profits have been rising on average.
What’s enabled this growth? Well, let’s take a look at whether it is only attributable to industry tailwinds, or if Forise International has experienced some company-specific growth. In the past couple of years, Forise International expanded bottom-line, while its top-line fell, by effectively managing its costs. This resulted in to a margin expansion and profitability over time. Inspecting growth from a sector-level, the SG capital markets industry has been growing, albeit, at a unexciting single-digit rate of 8.66% over the past year, . This is a turnaround from a volatile drop of -3.02% in the previous few years. This means that, in the recent industry expansion, Forise International has not been able to realize the gains unlike its average peer.
What does this mean?
Though Forise International’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research Forise International to get a more holistic view of the stock by looking at:
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Financial Health: Is I5H’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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Valuation: What is I5H 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 I5H is currently mispriced by the market.
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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 March 2018. 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.