Yahoo Finance Does Hock Lian Seng Holdings Limited’s (SGX:J2T) -44.64% Earnings Drop Reflect A Longer Term Trend?
Assessing Hock Lian Seng Holdings Limited’s (SGX:J2T) 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 Hock Lian Seng Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its construction industry peers. Check out our latest analysis for Hock Lian Seng Holdings
Was J2T’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I 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 blend enables me to analyze different companies on a similar basis, using the latest information. For Hock Lian Seng Holdings, its latest trailing-twelve-month earnings is S$19.53M, which, in comparison to the previous year’s level, has dropped by a large -44.64%. Given that these figures are fairly nearsighted, I have estimated an annualized five-year value for Hock Lian Seng Holdings’s net income, which stands at S$34.52M This doesn’t look much better, since earnings seem to have steadily been falling over time.
Why is this? Well, let’s look at what’s occurring with margins and if the rest of the industry is experiencing the hit as well. Over the last few years, revenue growth has been lagging behind which suggests that Hock Lian Seng Holdings’s bottom line has been propelled by unmaintainable cost-reductions. Looking at growth from a sector-level, the SG construction industry has been enduring some headwinds over the past couple of years, leading to an average earnings drop of -21.50% in the most recent year. This means whatever headwind the industry is facing, it’s hitting Hock Lian Seng Holdings harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. In some cases, companies that experience an extended period of diminishing earnings are going through some sort of reinvestment phase Although, if the entire industry is struggling to grow over time, it may be a indicator of a structural change, which makes Hock Lian Seng Holdings and its peers a riskier investment. I suggest you continue to research Hock Lian Seng Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for J2T’s future growth? Take a look at our free research report of analyst consensus for J2T’s outlook.
Financial Health: Is J2T’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
