Where China Petroleum & Chemical Corporation (HKG:386) Stands In Terms Of Earnings Growth Against Its Industry

After reading China Petroleum & Chemical Corporation's (SEHK:386) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether 386 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for China Petroleum & Chemical

How Did 386's Recent Performance Stack Up Against Its Past?

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 allows me to examine various companies on a more comparable basis, using the latest information. For China Petroleum & Chemical, its latest trailing-twelve-month earnings is CN¥55,969.0M, which, relative to the previous year's figure, has increased by an impressive 57.46%. Given that these figures may be somewhat myopic, I have determined an annualized five-year value for 386's earnings, which stands at CN¥55,774.9M. This suggests that, generally, China Petroleum & Chemical has been able to consistently raise its earnings over the last couple of years as well.

What's the driver of this growth? Well, let’s take a look at if it is only a result of an industry uplift, or if China Petroleum & Chemical has seen some company-specific growth. Though both top-line and bottom-line growth rates in the last couple of years, were, on average, negative, earnings were more so. While this brought about a margin contraction, it has softened China Petroleum & Chemical's earnings contraction. Looking at growth from a sector-level, the HK oil and gas industry has been amplifying average earnings growth of 54.48% in the previous year, . This is a a notable change from a volatile drop of -4.80% in the previous couple of years. This shows that, in the recent industry expansion, China Petroleum & Chemical is capable of amplifying this to its advantage.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research China Petroleum & Chemical to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 386’s future growth? Take a look at our free research report of analyst consensus for 386’s outlook.

2. Financial Health: Is 386’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 30 September 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.