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After looking at Jasper Investments Limited’s (SGX:FQ7) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Jasper Investments
Was FQ7 weak performance lately part of a long-term decline?
I prefer 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 blend allows me to analyze different stocks on a similar basis, using new information. For Jasper Investments, its most recent earnings (trailing twelve month) is US$83.00K, which compared to the previous year’s level, has declined by a substantial -39.42%. Given that these figures may be somewhat myopic, I have created an annualized five-year figure for FQ7’s earnings, which stands at -US$23.30M This means while earnings growth was negative against last year, in the long run, Jasper Investments’s profits have been increasing on average.
What’s the driver of this growth? Let’s see if it is merely a result of an industry uplift, or if Jasper Investments has seen some company-specific growth. Over the past couple of years, Jasper Investments grew bottom-line, while its top-line fell, by effectively managing its costs. This has caused to a margin expansion and profitability over time. Looking at growth from a sector-level, the SG energy services industry has been enduring severe headwinds over the previous couple of years, leading to an average earnings drop of -75.16% in the most recent year. This suggests that any recent headwind the industry is enduring, the impact on Jasper Investments has been softer relative to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research Jasper Investments to get a more holistic view of the stock by looking at:
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Financial Health: Is FQ7’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.
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Valuation: What is FQ7 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 FQ7 is currently mispriced by the market.
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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 December 2017. 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.