In This Article:
Understanding how Tamawood Limited (ASX:TWD) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Tamawood is doing by comparing its latest earnings with its long-term trend as well as the performance of its consumer durables industry peers. Check out our latest analysis for Tamawood
Commentary On TWD’s Past Performance
To account for any quarterly or half-yearly updates, I use 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 allows me to analyze many different companies in a uniform manner using the most relevant data points. For Tamawood, its most recent trailing-twelve-month earnings is AU$8.78M, which compared to last year’s level, has dropped by -4.63%. Since these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for TWD’s net income, which stands at AU$6.91M This suggests that though earnings growth was negative against the previous year, over the longer term, Tamawood’s profits have been growing on average.
How has it been able to do this? Well, let’s take a look at if it is merely attributable to industry tailwinds, or if Tamawood has experienced some company-specific growth. In the past few years, Tamawood expanded bottom-line, while its top-line declined, by effectively controlling its costs. This has led to to a margin expansion and profitability over time. Scanning growth from a sector-level, the Australian consumer durables industry has been relatively flat in terms of earnings growth over the past few years. This suggests that whatever recent headwind the industry is enduring, it’s hitting Tamawood harder than its peers.
What does this mean?
Tamawood’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Tamawood to get a better picture of the stock by looking at:
-
1. Financial Health: Is TWD’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. Valuation: What is TWD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TWD is currently mispriced by the market.
-
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.