Assessing Tantech Holdings Ltd’s (NASDAQ:TANH) 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 Tantech Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its chemicals industry peers. View our latest analysis for Tantech Holdings
Despite a decline, did TANH underperform the long-term trend and the industry?
I look at data from the most recent 12 months, 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 technique allows me to assess many different companies on a more comparable basis, using new information. For Tantech Holdings, its latest trailing-twelve-month earnings is US$1.67M, which, in comparison to last year’s figure, has declined by a significant -67.22%. Since these values may be somewhat short-term thinking, I have determined an annualized five-year value for Tantech Holdings’s net income, which stands at US$8.67M This doesn’t look much better, since earnings seem to have consistently been diminishing over the longer term.Why is this? Well, let’s take a look at what’s going on with margins and whether the whole industry is feeling the heat. Although revenue growth in the last few years, has been negative, earnings growth has been declining by even more, meaning Tantech Holdings has been increasing its expenses. This hurts margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the US chemicals industry has been growing its average earnings by double-digit 14.09% over the past twelve months, and a less exciting 5.51% over the past five. This means any tailwind the industry is benefiting from, Tantech Holdings has not been able to gain as much as its average peer.
What does this mean?
Though Tantech Holdings’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a drawn out period of decline in earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. You should continue to research Tantech Holdings to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Financial Health: Is TANH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 2. Valuation: What is TANH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in this free research report helps visualize whether TANH is currently mispriced by the market.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.