When China Mobile Limited (NYSE:CHL) released its most recent earnings update (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were China Mobile’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not CHL actually performed well. Below is a quick commentary on how I see CHL has performed. View our latest analysis for China Mobile
How Did CHL’s Recent Performance Stack Up Against Its Past?
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 various companies on a similar basis, using the latest information. For China Mobile, the latest earnings is CN¥112,741.0M, which, in comparison to last year’s level, Given that these figures are fairly nearsighted, I’ve created an annualized five-year value for CHL’s net income, which stands at CN¥117,727.3M. This shows that China Mobile’s average annual earnings have traditionally been higher, which signals a falling trend in earnings.To understand what’s happening, let’s look at what’s transpiring with margins and if the entire industry is feeling the heat. Revenue growth in the last few years, has been positive, nevertheless earnings growth has been falling. This implies that China Mobile has been ramping up expenses, which is hurting margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US wireless telcos industry has been growing, albeit, at a muted single-digit rate of 4.58% over the prior twelve months, . This is a turnaround from a volatile drop of -2.03% in the past couple of years. This suggests that any headwind the industry is enduring, it’s hitting China Mobile harder than its peers.
What does this mean?
Though China Mobile’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook. I recommend you continue to research China Mobile to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CHL’s future growth? Take a look at our free research report of analyst consensus for CHL’s outlook.
2. Financial Health: Is CHL’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.