When E Lighting Group Holdings Limited’s (SEHK:8222) announced its latest earnings (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were E Lighting Group Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 8222 actually performed well. Below is a quick commentary on how I see 8222 has performed. See our latest analysis for E Lighting Group Holdings
Did 8222 beat its long-term earnings growth trend and its industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 analyze many different companies on a more comparable basis, using new information. For E Lighting Group Holdings, its most recent earnings (trailing twelve month) is -HK$11.64M, which, against last year’s figure, has become less negative. Since these values may be somewhat short-term thinking, I’ve determined an annualized five-year value for 8222’s net income, which stands at -HK$3.86M. This means E Lighting Group Holdings has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.We can further examine E Lighting Group Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years E Lighting Group Holdings’s top-line has risen by a mere 2.95%, 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 specialty retail industry has been growing its average earnings by double-digit 19.05% over the past twelve months, . This is a change from a volatile drop of -4.78% in the past few years. This means while E Lighting Group Holdings is presently loss-making, it may have only just benefited from the recent industry expansion, moving earnings towards to right direction.
What does this mean?
Though E Lighting Group Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues E Lighting Group Holdings may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research E Lighting Group Holdings to get a more holistic view of the stock by looking at:
- Financial Health: Is 8222’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.
- 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.