Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Yihai International Holding Ltd’s (SEHK:1579) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Yihai International Holding

Could 1579 beat the long-term trend and outperform its industry?

For the most up-to-date info, I 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 technique enables me to analyze different stocks in a uniform manner using the latest information. For Yihai International Holding, its most recent trailing-twelve-month earnings is CN¥260.67M, which, relative to last year’s figure, has risen by 39.61%. Since these figures may be somewhat nearsighted, I have calculated an annualized five-year value for 1579’s earnings, which stands at CN¥157.29M This means that, on average, Yihai International Holding has been able to gradually raise its net income over the last few years as well.

What’s enabled this growth? Well, let’s take a look at if it is solely owing to industry tailwinds, or if Yihai International Holding has seen some company-specific growth. Over the past few years, Yihai International Holding increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the HK food industry has been relatively flat in terms of earnings growth over the past couple of years. This means whatever recent headwind the industry is experiencing, the impact on Yihai International Holding has been softer relative to its peers.

What does this mean?

Yihai International Holding’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Yihai International Holding has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Yihai International Holding to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 1579’s future growth? Take a look at our free research report of analyst consensus for 1579’s outlook.

2. Financial Health: Is 1579’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 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.