In this article, I will take a look at Vard Holdings Limited’s (SGX:MS7) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, along with how the rest of MS7’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View our latest analysis for Vard Holdings

Did MS7 beat its long-term earnings growth trend and its industry?

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 technique allows me to analyze different companies in a uniform manner using new information. For Vard Holdings, its latest earnings (trailing twelve month) is -NOK169.0M, which compared to the prior year’s figure, has become less negative. Since these values are relatively nearsighted, I’ve calculated an annualized five-year figure for Vard Holdings’s earnings, which stands at NOK394.9M.

We can further analyze Vard Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Vard Holdings has seen an annual decline in revenue of -5.24%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the SG machinery industry has been growing its average earnings by double-digit 45.72% in the past twelve months, and a more subdued 6.33% over the previous five years. This shows that whatever uplift the industry is profiting from, Vard Holdings has not been able to reap as much as its industry peers.

What does this mean?

Vard 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 envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Vard Holdings may be facing and whether management guidance has dependably been met in the past. You should continue to research Vard Holdings to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for MS7’s future growth? Take a look at our free research report of analyst consensus for MS7’s outlook.

• 2. Financial Health: Is MS7’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 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.