After looking at Genscript Biotech Corporation’s (SEHK:1548) latest earnings announcement (30 June 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 Genscript Biotech
Commentary On 1548’s Past Performance
For the purpose of this commentary, I like 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 method allows me to analyze various companies on a more comparable basis, using the latest information. “For Genscript Biotech, its “, latest twelve-month earnings is $28.0M, which, relative to the previous year’s figure, has climbed up by 12.06%. Since these figures may be fairly short-term thinking, I have estimated an annualized five-year figure for Genscript Biotech’s net income, which stands at $16.9M. This means on average, Genscript Biotech has been able to steadily raise its bottom line over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is only a result of an industry uplift, or if Genscript Biotech has seen some company-specific growth. In the last few years, Genscript Biotech expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the HK life sciences tools and services industry has been growing its average earnings by double-digit 11.15% over the prior twelve months, and 18.57% over the past five years. This means that any tailwind the industry is deriving benefit from, Genscript Biotech is capable of leveraging this to its advantage.
What does this mean?
Though Genscript Biotech’s past data is helpful, it is only one aspect of my investment thesis. While Genscript Biotech has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Genscript Biotech to get a better picture of the stock by looking at: