Assessing Marsden Maritime Holdings Limited’s (NZSE:MMH) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess MMH’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. See our latest analysis for Marsden Maritime Holdings

Was MMH’s weak performance lately a part of a long-term decline?

I look at 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 allows me to assess many different companies on a more comparable basis, using new information. For Marsden Maritime Holdings, its most recent earnings (trailing twelve month) is NZ$10.32M, which, in comparison to the previous year’s figure, has fallen by -20.26%. Given that these values are somewhat short-term thinking, I have computed an annualized five-year figure for Marsden Maritime Holdings’s earnings, which stands at NZ$8.54M This suggests that despite the fact that earnings growth was negative against the previous year, over time, Marsden Maritime Holdings’s earnings have been increasing on average.

What’s the driver of this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if Marsden Maritime Holdings has experienced some company-specific growth. In the last couple of years, Marsden Maritime Holdings increased bottom-line, while its top-line declined, by effectively managing its costs. This brought about to a margin expansion and profitability over time. Viewing growth from a sector-level, the NZ infrastructure industry has been growing its average earnings by double-digit 11.25% over the prior year, and a less exciting 8.26% over the past five years. This means that whatever uplift the industry is deriving benefit from, Marsden Maritime Holdings has not been able to realize the gains unlike its average peer.

What does this mean?

Marsden Maritime Holdings’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 capricious earnings, can have many factors impacting its business. I suggest you continue to research Marsden Maritime Holdings to get a more holistic view of the stock by looking at:

1. Financial Health: Is MMH’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. 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 December 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.