Examining Tianyun International Holdings Limited’s (SEHK:6836) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 6836’s latest performance announced on 30 June 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for Tianyun International Holdings

Was 6836’s recent earnings decline worse than the long-term trend and the industry?

To account for any quarterly or half-yearly updates, 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 on a more comparable basis, using the latest information. For Tianyun International Holdings, its most recent trailing-twelve-month earnings is CN¥119.5M, which, against last year’s figure, has dropped by -3.29%. Given that these figures are fairly nearsighted, I have created an annualized five-year value for Tianyun International Holdings’s earnings, which stands at CN¥101.1M. This shows that even though earnings growth was negative against last year, in the long run, Tianyun International Holdings’s profits have been increasing on average.

What’s the driver of this growth? Let’s take a look at whether it is merely a result of industry tailwinds, or if Tianyun International Holdings has experienced some company-specific growth. The ascend in earnings seems to be driven by a solid top-line increase beating its growth rate of costs. Though this resulted in a margin contraction, it has made Tianyun International Holdings more profitable. Eyeballing growth from a sector-level, the HK food industry has been enduring some headwinds over the past few years, leading to an average earnings drop of -3.70% in the most recent year. This suggests that any recent headwind the industry is facing, Tianyun International Holdings is less exposed compared to its peers.

What does this mean?

Tianyun International Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Tianyun International Holdings to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for 6836’s future growth? Take a look at our free research report of analyst consensus for 6836’s outlook.

• 2. Financial Health: Is 6836’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.

• 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 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.