Today I will take a look at JC International Group Limited’s (ASX:JCI) most recent earnings update (30 June 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the construction industry performed. As an investor, I find it beneficial to assess JCI’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for JC International Group

Despite a decline, did JCI underperform the long-term trend and the industry?

For the most up-to-date info, 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 allows me to examine many different companies on a similar basis, using the latest information. For JC International Group, its latest earnings (trailing twelve month) is A$7.9M, which, in comparison to the prior year’s figure, has fallen by -10.57%. Since these values are somewhat short-term thinking, I’ve computed an annualized five-year figure for JCI’s net income, which stands at A$6.7M. This means even though earnings growth was negative against the previous year, over the longer term, JC International Group’s profits have been rising on average.

What’s enabled this growth? Let’s take a look at whether it is solely attributable to industry tailwinds, or if JC International Group has seen some company-specific growth. In the past few years, JC International Group grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the Australian construction industry has been growing its average earnings by double-digit 21.67% over the prior year, . This is a turnaround from a volatile drop of -4.19% in the past couple of years. This shows that, in the recent industry expansion, JC International Group has not been able to realize the gains unlike its industry peers.

What does this mean?

JC International Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research JC International Group to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is JCI’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 30 June 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.