When WuXi Biologics (Cayman) Inc (SEHK:2269) released its most recent earnings update (30 June 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 WuXi Biologics (Cayman) 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 2269 has performed. View our latest analysis for WuXi Biologics (Cayman)

Were 2269’s earnings stronger than its past performances and the industry?

I prefer to use data from the most recent 12 months, 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 method enables me to examine different stocks in a uniform manner using the most relevant data points. For WuXi Biologics (Cayman), its most recent trailing-twelve-month earnings is CN¥149.44M, which, in comparison to last year’s figure, has climbed up by 16.24%. Given that these figures may be relatively short-term, I’ve computed an annualized five-year value for 2269’s net income, which stands at CN¥115.56M This means on average, WuXi Biologics (Cayman) has been able to steadily grow its bottom line over the past couple of years as well.

What’s the driver of this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if WuXi Biologics (Cayman) has experienced some company-specific growth. Over the last few years, WuXi Biologics (Cayman) increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the HK life sciences industry has been growing its average earnings by double-digit 12.80% over the prior twelve months, and 19.20% over the past five years. This suggests that any tailwind the industry is enjoying, WuXi Biologics (Cayman) is able to leverage this to its advantage.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as WuXi Biologics (Cayman) gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research WuXi Biologics (Cayman) to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for 2269’s future growth? Take a look at our free research report of analyst consensus for 2269’s outlook.

• 2. Financial Health: Is 2269’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.