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When Beaver Group (Holding) Company Limited (SEHK:8275) announced its most recent earnings (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Beaver Group (Holding) has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see 8275 has performed. See our latest analysis for Beaver Group (Holding)
Did 8275 perform worse than its track record and industry?
I like to use 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 blend allows me to examine different companies on a more comparable basis, using the latest information. For Beaver Group (Holding), its latest trailing-twelve-month earnings is -HK$4.42M, which, in comparison to the previous year’s figure, has turned from positive to negative. Since these figures are fairly short-term thinking, I’ve computed an annualized five-year value for Beaver Group (Holding)’s earnings, which stands at HK$6.22M.
We can further examine Beaver Group (Holding)’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Beaver Group (Holding)’s top-line has increased by 20.03% on average, implying that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the HK construction industry has been enduring some headwinds in the past year, leading to average earnings dropping by more than half. This is a a notable change, given that the industry has been delivering a relatively flat growth rate over the last couple of years. This suggests that any near-term the industry is facing, it’s hitting Beaver Group (Holding) harder than its peers.
What does this mean?
Beaver Group (Holding)’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 useful step is to assess company-specific issues Beaver Group (Holding) may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Beaver Group (Holding) to get a better picture of the stock by looking at: