For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Fuwei Films (Holdings) Co Ltd’s (NASDAQ:FFHL) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. View our latest analysis for Fuwei Films (Holdings)
Did FFHL beat its long-term earnings growth trend and its industry?
I look at 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 allows me to analyze various companies on a more comparable basis, using the latest information. For Fuwei Films (Holdings), its latest earnings is -CN¥54.7M, which, in comparison to the prior year’s figure, has become less negative. Given that these values may be relatively myopic, I have determined an annualized five-year figure for Fuwei Films (Holdings)’s net income, which stands at -CN¥41.3M. This suggests that, Fuwei Films (Holdings) has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.
We can further examine Fuwei Films (Holdings)’s loss by looking at what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -14.50%. The key to profitability here is to make sure the company’s cost growth is well-managed. Looking at growth from a sector-level, the US chemicals industry has been growing its average earnings by double-digit 14.21% in the past twelve months, and a more subdued 5.47% over the past couple of years. This means whatever tailwind the industry is benefiting from, Fuwei Films (Holdings) has not been able to reap as much as its average peer.
What does this mean?
Fuwei Films (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 hard to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Fuwei Films (Holdings) may be facing and whether management guidance has regularly been met in the past. You should continue to research Fuwei Films (Holdings) to get a more holistic view of the stock by looking at:
1. Financial Health: Is FFHL’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.