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Measuring Global Testing Corporation Limited’s (SGX:AYN) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess AYN’s recent performance announced on 30 September 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Global Testing
Was AYN’s weak performance lately a part of a long-term decline?
I use the ‘latest twelve-month’ data, 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 method enables me to examine many different companies on a more comparable basis, using new information. For Global Testing, its latest earnings (trailing twelve month) is US$1.69M, which compared to the prior year’s figure, has fallen by a substantial -54.75%. Given that these figures may be relatively myopic, I have calculated an annualized five-year figure for AYN’s net income, which stands at US$278.96K This shows that even though earnings declined against the prior year, in the long run, Global Testing’s profits have been rising on average.
What’s the driver of this growth? Well, let’s take a look at if it is solely attributable to an industry uplift, or if Global Testing has seen some company-specific growth. Over the past few years, Global Testing grew bottom-line, while its top-line declined, by effectively controlling its costs. This has led to to a margin expansion and profitability over time. Viewing growth from a sector-level, the SG semiconductor industry has been ramping up growth, more than doubling average earnings over the prior year, and a more subdued 7.29% over the previous five years. This suggests that any uplift the industry is profiting from, Global Testing has not been able to realize the gains unlike its industry peers.
What does this mean?
Global Testing’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I suggest you continue to research Global Testing to get a better picture of the stock by looking at:
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1. Financial Health: Is AYN’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 AYN 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 AYN 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 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.