Examining Ming Le Sports AG’s (DB:ML2K) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess ML2K’s latest performance announced on 30 September 2013 and weight these figures against its longer term trend and industry movements. Check out our latest analysis for Ming Le Sports
How Did ML2K’s Recent Performance Stack Up Against Its Past?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to examine many different companies on a similar basis, using the most relevant data points. For Ming Le Sports, its most recent earnings (trailing twelve month) is €50.91M, which, in comparison to the previous year’s level, has declined by -10.60%. Since these values are relatively myopic, I have estimated an annualized five-year value for Ming Le Sports’s earnings, which stands at €53.91M This doesn’t seem to paint a better picture, since earnings seem to have steadily been falling over time.What could be happening here? Well, let’s look at what’s occurring with margins and whether the entire industry is feeling the heat. Revenue growth in the last couple of years, has been positive, however, earnings growth has been lagging behind meaning Ming Le Sports has been ramping up its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the DE luxury industry has been relatively flat in terms of earnings growth over the past couple of years. This shows that whatever near-term headwind the industry is experiencing, it’s hitting Ming Le Sports harder than its peers.
What does this mean?
Ming Le Sports’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Generally companies that face a prolonged period of decline in earnings are undergoing some sort of reinvestment phase . However, if the whole industry is struggling to grow over time, it may be a sign of a structural shift, which makes Ming Le Sports and its peers a higher risk investment. You should continue to research Ming Le Sports to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Financial Health: Is ML2K’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.