Understanding PSL Holdings Limited’s (SGX:BLL) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how PSL Holdings is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for PSL Holdings
Could BLL beat the long-term trend and outperform its industry?
I look at data from the most recent 12 months, 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 analyze various companies in a uniform manner using the most relevant data points. For PSL Holdings, its latest earnings (trailing twelve month) is -S$5.37M, which, against the previous year’s figure, has become less negative. Given that these figures are somewhat myopic, I have computed an annualized five-year figure for BLL’s net income, which stands at -S$1.31M. This suggests that, PSL Holdings has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.
We can further analyze PSL Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years PSL Holdings has seen an annual decline in revenue of -30.10%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the SG construction industry has been enduring some headwinds over the last couple of years, leading to an average earnings drop of -7.61% in the most recent year. This means even though PSL Holdings is currently unprofitable, whatever near-term headwind the industry is enduring, PSL Holdings is relatively better-cushioned than its peers.
What does this mean?
Though PSL 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 PSL Holdings may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research PSL Holdings to get a better picture of the stock by looking at:
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1. Financial Health: Is BLL’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. 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.