Examining how China Everbright Water Limited (SGX:U9E) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how China Everbright Water is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its water utilities industry peers. Check out our latest analysis for China Everbright Water
Did U9E beat its long-term earnings growth trend and its industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to examine different stocks on a more comparable basis, using the most relevant data points. For China Everbright Water, its most recent trailing-twelve-month earnings is HK$455.4M, which, in comparison to the previous year’s figure, has risen by 20.52%. Since these values may be relatively nearsighted, I’ve determined an annualized five-year figure for China Everbright Water’s earnings, which stands at HK$364.4M. This shows that, generally, China Everbright Water has been able to steadily raise its net income over the past couple of years as well.How has it been able to do this? Let’s take a look at whether it is only attributable to an industry uplift, or if China Everbright Water has seen some company-specific growth. The hike in earnings seems to be supported by a substantial top-line increase beating its growth rate of expenses. Though this resulted in a margin contraction, it has made China Everbright Water more profitable. Inspecting growth from a sector-level, the SG water utilities industry has been growing, albeit, at a subdued single-digit rate of 6.90% over the previous year, and 6.83% over the past five. This means whatever tailwind the industry is deriving benefit from, China Everbright Water is capable of amplifying this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While China Everbright Water has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research China Everbright Water to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for U9E’s future growth? Take a look at our free research report of analyst consensus for U9E’s outlook.
- 2. Financial Health: Is U9E’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.