When Sino-Global Shipping America Ltd (NASDAQ:SINO) released its most recent earnings update (31 March 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Sino-Global Shipping America has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see SINO has performed. View out our latest analysis for Sino-Global Shipping America
Was SINO’s recent earnings decline indicative of a tough track record?SINO’s trailing twelve-month earnings (from 31 March 2018) of US$1.79m has declined by -38.68% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 37.05%, indicating the rate at which SINO is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and if the entire industry is experiencing the hit as well.
In the past few years, revenue growth has been lagging behind earnings, which implies that Sino-Global Shipping America’s bottom line has been driven by unsustainable cost-reductions. Scanning growth from a sector-level, the US infrastructure industry has been growing its average earnings by double-digit 14.42% over the past year, and a more subdued 8.78% over the last five years. This shows that whatever tailwind the industry is profiting from, Sino-Global Shipping America has not been able to gain as much as its average peer.In terms of returns from investment, Sino-Global Shipping America has not invested its equity funds well, leading to a 11.33% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 7.56% exceeds the US Infrastructure industry of 6.41%, indicating Sino-Global Shipping America has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Sino-Global Shipping America’s debt level, has declined over the past 3 years from 11.71% to 10.15%.
What does this mean?
Though Sino-Global Shipping America’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Sino-Global Shipping America to get a better picture of the stock by looking at:
- Financial Health: Is SINO’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.