With A -25.67% Earnings Drop, Did Boill Healthcare Holdings Limited (HKG:1246) Really Underperform?

Assessing Boill Healthcare Holdings Limited’s (SEHK:1246) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Boill Healthcare Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its construction industry peers. See our latest analysis for Boill Healthcare Holdings

Despite a decline, did 1246 underperform the long-term trend and the industry?

I prefer to 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 blend enables me to assess different stocks on a more comparable basis, using the latest information. For Boill Healthcare Holdings, its most recent trailing-twelve-month earnings is -HK$410.78M, which compared to the previous year’s figure, has become more negative. Since these figures may be somewhat short-term thinking, I have created an annualized five-year value for 1246’s net income, which stands at -HK$106.29M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.

SEHK:1246 Income Statement May 2nd 18
SEHK:1246 Income Statement May 2nd 18
We can further examine Boill Healthcare Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Boill Healthcare Holdings’s top-line has risen by a mere 6.70%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the HK construction industry has been enduring some headwinds over the past twelve months, leading to an average earnings drop of -9.36%. This is a major change, given that the industry has been delivering a positive rate of 9.19%, on average, over the past half a decade. This suggests that any near-term headwind the industry is enduring, it’s hitting Boill Healthcare Holdings harder than its peers.

What does this mean?

Boill Healthcare Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Boill Healthcare Holdings may be facing and whether management guidance has consistently been met in the past. You should continue to research Boill Healthcare Holdings to get a more holistic view of the stock by looking at:

  1. Financial Health: Is 1246’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. Valuation: What is 1246 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1246 is currently mispriced by the market.
  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 30 September 2017. This may not be consistent with full year annual report figures.