Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at China Kangda Food Company Limited’s (SGX:P74) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for China Kangda Food
How Well Did P74 Perform?
I prefer to use the ‘latest twelve-month’ data, 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 examine various companies in a uniform manner using the most relevant data points. For China Kangda Food, the most recent bottom-line -CN¥8.4M, which, against the prior year’s figure, has become less negative. Given that these figures are fairly short-term thinking, I’ve created an annualized five-year figure for China Kangda Food’s net income, which stands at CN¥0.5M.
Additionally, we can evaluate China Kangda Food’s loss by researching what has been happening in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over last few years has been somewhat subdued, remaining flat on average at -0.25%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be controlling costs. Eyeballing growth from a sector-level, the SG food industry has been amplifying average earnings growth of 54.02% in the past twelve months, . This is a a substantial turnaround from a volatile drop of -10.70% in the past couple of years. This suggests that whatever tailwind the industry is deriving benefit from, China Kangda Food has not been able to gain as much as its average peer.
What does this mean?
China Kangda Food’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues China Kangda Food may be facing and whether management guidance has regularly been met in the past. You should continue to research China Kangda Food to get a better picture of the stock by looking at:
1. Financial Health: Is P74’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.