After reading Chasen Holdings Limited’s (SGX:5NV) latest earnings update (31 March 2018), 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 5NV 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 Chasen Holdings
Were 5NV’s earnings stronger than its past performances and the 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 allows me to examine many different companies on a similar basis, using the latest information. For Chasen Holdings, its latest trailing-twelve-month earnings is S$5.49M, which, in comparison to the previous year’s level, has climbed up by more than double. Given that these values are fairly nearsighted, I’ve computed an annualized five-year value for Chasen Holdings’s net income, which stands at S$1.95M This means that, generally, Chasen Holdings has been able to consistently raise its net income over the last couple of years as well.How has it been able to do this? Well, let’s take a look at if it is only a result of an industry uplift, or if Chasen Holdings has seen some company-specific growth. Over the last few years, Chasen Holdings top-line expansion has overtaken earnings and the growth rate of expenses. Though this has caused a margin contraction, it has cushioned Chasen Holdings’s earnings contraction. Inspecting growth from a sector-level, the SG commercial services industry has been growing, albeit, at a muted single-digit rate of 3.31% over the previous year, and 3.86% over the previous five years. This means that whatever near-term headwind the industry is facing, Chasen Holdings is less exposed compared to its peers.
What does this mean?
Though Chasen Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Chasen Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Chasen Holdings to get a better picture of the stock by looking at:
- Financial Health: Is 5NV’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.
- Valuation: What is 5NV 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 5NV is currently mispriced by the market.
- 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.