After reading Kingmaker Footwear Holdings Limited’s (SEHK:1170) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Kingmaker Footwear Holdings’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Kingmaker Footwear Holdings
Were 1170’s earnings stronger than its past performances and the industry?
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 technique enables me to assess many different companies on a similar basis, using the latest information. For Kingmaker Footwear Holdings, its most recent bottom-line (trailing twelve month) is HK$295.60M, which, relative to the prior year’s level, has increased by a non-trivial 89.98%. Given that these values are relatively short-term thinking, I’ve estimated an annualized five-year figure for Kingmaker Footwear Holdings’s earnings, which stands at HK$109.59M This means generally, Kingmaker Footwear Holdings has been able to consistently grow its earnings over the last couple of years as well.
How has it been able to do this? Well, let’s take a look at if it is solely due to an industry uplift, or if Kingmaker Footwear Holdings has seen some company-specific growth. In the past few years, Kingmaker Footwear Holdings grew its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the HK luxury industry has been growing its average earnings by double-digit 12.73% over the prior year, . This is a change from a volatile drop of -3.95% in the last couple of years. This shows that, in the recent industry expansion, Kingmaker Footwear Holdings is able to leverage this to its advantage.
What does this mean?
Kingmaker Footwear Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Kingmaker Footwear Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Kingmaker Footwear Holdings to get a more holistic view of the stock by looking at: