For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Challenger Technologies Limited’s (SGX:573) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. View our latest analysis for Challenger Technologies
Was 573’s recent earnings decline indicative of a tough track record?
I prefer to use the ‘latest twelve-month’ data, 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 technique enables me to assess different companies in a uniform manner using the most relevant data points. “For Challenger Technologies, its “, latest earnings is SGD13.4M, which, in comparison to the previous year’s level, has dropped by -20.90%. Since these values may be somewhat short-term thinking, I have computed an annualized five-year figure for Challenger Technologies’s earnings, which stands at SGD15.5M. This doesn’t look much better, since earnings seem to have consistently been declining over the longer term.
What could be happening here? Well, let’s take a look at what’s occurring with margins and if the entire industry is experiencing the hit as well. Revenue growth in the last few years, has been positive, yet earnings growth has been falling. This suggest that Challenger Technologies has been increasing expenses, which is hurting margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the SG specialty retail industry has been growing, albeit, at a unexciting single-digit rate of 2.38% in the previous twelve months, . This is a turnaround from a volatile drop of -6.86% in the past couple of years. This means whatever headwind the industry is experiencing, it’s hitting Challenger Technologies harder than its peers.
What does this mean?
Challenger Technologies’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Typically companies that endure a drawn out period of reduction in earnings are going through some sort of reinvestment phase . Though if the whole industry is struggling to grow over time, it may be a sign of a structural change, which makes Challenger Technologies and its peers a riskier investment. I recommend you continue to research Challenger Technologies to get a better picture of the stock by looking at: