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 Postal Savings Bank of China Co Ltd (SEHK:1658) useful as an attempt to give more color around how Postal Savings Bank of China is currently performing. View our latest analysis for Postal Savings Bank of China
Did 1658’s recent earnings growth beat the long-term trend and the industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 method enables me to analyze various companies on a more comparable basis, using the latest information. For Postal Savings Bank of China, its most recent trailing-twelve-month earnings is CN¥45,655.0M, which compared to the prior year’s figure, has moved up by 18.39%. Given that these values may be fairly nearsighted, I have created an annualized five-year value for 1658’s earnings, which stands at CN¥35,839.3M. This means that, on average, Postal Savings Bank of China has been able to gradually raise its net income over the past few years as well.What’s the driver of this growth? Let’s see whether it is solely because of industry tailwinds, or if Postal Savings Bank of China has seen some company-specific growth. Over the past few years, Postal Savings Bank of China expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the HK banks industry has been growing, albeit, at a subdued single-digit rate of 4.21% over the past year, and 5.29% over the past five years. This shows that whatever recent headwind the industry is enduring, Postal Savings Bank of China is relatively better-cushioned than its peers.
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 Postal Savings Bank of China gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Postal Savings Bank of China to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for 1658’s future growth? Take a look at our free research report of analyst consensus for 1658’s outlook.
- 2. Financial Health: Is 1658’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.