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Assessing SIA Engineering Company Limited’s (SGX:S59) 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 S59’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for SIA Engineering
How Well Did S59 Perform?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 method allows me to assess different stocks in a uniform manner using the most relevant data points. For SIA Engineering, its most recent bottom-line (trailing twelve month) is S$174.97M, which, in comparison to the previous year’s figure, has declined by a substantial -46.65%. Since these figures are relatively myopic, I have determined an annualized five-year value for SIA Engineering’s earnings, which stands at S$244.88M This doesn’t look much better, as earnings seem to have gradually been falling over time.
Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well. Although revenue growth in the past couple of years, has been negative, earnings growth has been falling by even more, suggesting that SIA Engineering has been increasing its expenses. This harms margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the SG infrastructure industry has been growing its average earnings by double-digit 13.51% in the prior year, and a less exciting 5.95% over the past five. This suggests that whatever tailwind the industry is profiting from, SIA Engineering has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Usually companies that experience an extended period of decline in earnings are going through some sort of reinvestment phase in order to keep up with the latest industry expansion and disruption. You should continue to research SIA Engineering to get a more holistic view of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for S59’s future growth? Take a look at our free research report of analyst consensus for S59’s outlook.
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2. Financial Health: Is S59’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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3. 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.