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In this article, I will take a look at Global Strategic Group Limited’s (SEHK:8007) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of 8007’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Global Strategic Group
How Did 8007’s Recent Performance Stack Up Against Its Past?
I look at 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 blend allows me to assess different companies on a more comparable basis, using new information. For Global Strategic Group, its latest earnings (trailing twelve month) is -HK$33.22M, which, against the prior year’s figure, has become more negative. Given that these figures are fairly short-term, I have estimated an annualized five-year value for Global Strategic Group’s net income, which stands at -HK$22.98M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further analyze Global Strategic Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Global Strategic Group’s top-line has increased by 33.54% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the HK trade distributors industry has been growing its average earnings by double-digit 22.65% in the prior twelve months, and 15.50% over the past five. This suggests that whatever uplift the industry is deriving benefit from, Global Strategic Group has not been able to leverage it as much as its industry peers.
What does this mean?
Global Strategic Group’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 forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Global Strategic Group may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Global Strategic Group to get a more holistic view of the stock by looking at: