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When Tai Sin Electric Limited (SGX:500) announced its most recent earnings (30 September 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Tai Sin Electric performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 500 has performed.
View our latest analysis for Tai Sin Electric
How Well Did 500 Perform?
500’s trailing twelve-month earnings (from 30 September 2018) of S$14m has declined by -18% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -7.0%, indicating the rate at which 500 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Tai Sin Electric has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. Furthermore, its return on assets (ROA) of 5.8% is below the SG Electrical industry of 6.1%, indicating Tai Sin Electric’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Tai Sin Electric’s debt level, has declined over the past 3 years from 12% to 7.6%.
What does this mean?
Though Tai Sin Electric’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that face a prolonged period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. I recommend you continue to research Tai Sin Electric to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 500’s future growth? Take a look at our free research report of analyst consensus for 500’s outlook.
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Financial Health: Are 500’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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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 September 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.