For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Beaver Group (Holding) Company Limited (SEHK:8275) useful as an attempt to give more color around how Beaver Group (Holding) is currently performing. Check out our latest analysis for Beaver Group (Holding)
How Well Did 8275 Perform?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to assess different companies on a more comparable basis, using new information. “For Beaver Group (Holding), its “, most recent earnings is HK$4.7M, which, against last year’s figure, has declined by a substantial -60.60%. Given that these figures may be relatively nearsighted, I’ve computed an annualized five-year value for 8275’s earnings, which stands at HK$8.3M. This doesn’t look much better, since earnings seem to have gradually been deteriorating over time.
Why could this be happening? Well, let’s take a look at what’s going on with margins and if the entire industry is feeling the heat. Revenue growth in the past few years, has been positive, nevertheless earnings growth has been deteriorating. This means Beaver Group (Holding) has been growing expenses, which is hurting margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the HK construction and engineering industry has been enduring some headwinds over the past year, leading to average earnings dropping by more than half. This is a a solid change, given that the industry has been delivering a relatively flat growth rate over the past couple of years. This suggests that whatever near-term headwind the industry is experiencing, it’s hitting Beaver Group (Holding) harder than its peers.
What does this mean?
Beaver Group (Holding)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Usually companies that endure a prolonged period of reduction in earnings are going through some sort of reinvestment phase . However, if the whole industry is struggling to grow over time, it may be a indicator of a structural shift, which makes Beaver Group (Holding) and its peers a riskier investment. I suggest you continue to research Beaver Group (Holding) to get a better picture of the stock by looking at: