For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Vietnam Industrial Investments Limited (ASX:VII) useful as an attempt to give more color around how Vietnam Industrial Investments is currently performing. View our latest analysis for Vietnam Industrial Investments

Was VII weak performance lately part of a long-term decline?

For the purpose of this commentary, I like to use data from the most recent 12 months, 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 enables me to analyze different companies on a more comparable basis, using the most relevant data points. For Vietnam Industrial Investments, its latest earnings (trailing twelve month) is AU$2.40M, which, in comparison to last year’s figure, has sunken by a non-trivial -72.17%. Given that these values are somewhat short-term, I’ve determined an annualized five-year figure for VII’s net income, which stands at AU$2.37M This means although earnings growth was negative against last year, over time, Vietnam Industrial Investments’s earnings have been rising on average.

How has it been able to do this? Let’s see if it is solely a result of industry tailwinds, or if Vietnam Industrial Investments has seen some company-specific growth. In the last couple of years, Vietnam Industrial Investments grew bottom-line, while its top-line declined, by effectively managing its costs. This has caused to a margin expansion and profitability over time. Inspecting growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.35% over the past year, and 12.96% over the past five. This suggests that whatever tailwind the industry is deriving benefit from, Vietnam Industrial Investments has not been able to reap as much as its industry peers.

What does this mean?

Though Vietnam Industrial Investments’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. You should continue to research Vietnam Industrial Investments to get a better picture of the stock by looking at:

• 1. Financial Health: Is VII’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. 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 31 December 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.