After reading Joyce Boutique Holdings Limited’s (SEHK:647) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether 647 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Joyce Boutique Holdings
Commentary On 647’s Past Performance
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess various companies on a more comparable basis, using new information. For Joyce Boutique Holdings, its most recent twelve-month earnings is -HK$53.4M, which, in comparison to last year’s level, has become less negative. Given that these values are relatively myopic, I’ve determined an annualized five-year value for Joyce Boutique Holdings’s earnings, which stands at HK$43.5M.
We can further analyze Joyce Boutique Holdings’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has been negative at -2.92%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the HK specialty retail industry has been growing its average earnings by double-digit 18.14% in the past year, . This is a turnaround from a volatile drop of -6.87% in the last few years. This means that any tailwind the industry is profiting from, Joyce Boutique Holdings has not been able to leverage it as much as its average peer.
What does this mean?
Though Joyce Boutique Holdings’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Joyce Boutique Holdings may be facing and whether management guidance has consistently been met in the past. You should continue to research Joyce Boutique Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is 647’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.