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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Tomsk Distribution Company (MISX:TORS) useful as an attempt to give more color around how Tomsk Distribution is currently performing. View our latest analysis for Tomsk Distribution

Did TORS perform worse than its track record and industry?

I look at 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 technique enables me to analyze different stocks in a uniform manner using new information. For Tomsk Distribution, its latest trailing-twelve-month earnings is RUРУБ241.27M, which compared to last year’s level, has declined by -26.69%. Since these values are fairly nearsighted, I’ve determined an annualized five-year figure for Tomsk Distribution’s earnings, which stands at RUРУБ276.09M This doesn’t seem to paint a better picture, since earnings seem to have consistently been deteriorating over the longer term.

Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is feeling the heat. Over the past few years, revenue growth has failed to keep up with earnings, which indicates that Tomsk Distribution’s bottom line has been driven by unsustainable cost-cutting. Scanning growth from a sector-level, the RU electric utilities industry has been growing its average earnings by double-digit 12.44% in the prior twelve months, and a more muted 2.92% over the last five years. This shows that any tailwind the industry is benefiting from, Tomsk Distribution has not been able to reap as much as its average peer.

What does this mean?

Though Tomsk Distribution’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face an extended period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry disruption and growth. I recommend you continue to research Tomsk Distribution to get a better picture of the stock by looking at:

• 1. Financial Health: Is TORS’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 TORS 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 TORS 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 30 September 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.