For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Target Insurance (Holdings) Limited’s (SEHK:6161) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Target Insurance (Holdings)
How Did 6161’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 allows me to assess different stocks in a uniform manner using the latest information. For Target Insurance (Holdings), its most recent earnings (trailing twelve month) is -HK$2.78M, which, in comparison to the previous year’s level, has turned from positive to negative. Since these figures may be relatively nearsighted, I’ve calculated an annualized five-year value for 6161’s net income, which stands at HK$38.09M.
We can further analyze Target Insurance (Holdings)’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Target Insurance (Holdings)’s top-line has increased by a mere 3.99%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the HK insurance industry has been growing its average earnings by double-digit 19.80% in the previous twelve months, and 12.81% over the past half a decade. This means whatever tailwind the industry is deriving benefit from, Target Insurance (Holdings) has not been able to reap as much as its industry peers.
What does this mean?
Target Insurance (Holdings)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to assess company-specific issues Target Insurance (Holdings) may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Target Insurance (Holdings) to get a more holistic view of the stock by looking at:
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1. Financial Health: Is 6161’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 30 June 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.