After reading Bonso Electronics International Inc’s (NASDAQ:BNSO) most recent earnings announcement (31 March 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 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. View our latest analysis for Bonso Electronics International
How Well Did BNSO Perform?
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 technique enables me to examine different stocks on a similar basis, using the latest information. For Bonso Electronics International, its most recent trailing-twelve-month earnings is $2.8M, which, relative to the prior year’s figure, has plunged by -2.65%. Since these figures are somewhat short-term, I have estimated an annualized five-year figure for BNSO’s earnings, which stands at $0.5M. This means even though earnings declined against the previous year, over time, Bonso Electronics International’s profits have been rising on average.
How has it been able to do this? Let’s see if it is only because of industry tailwinds, or if Bonso Electronics International has seen some company-specific growth. In the last couple of years, Bonso Electronics International expanded bottom-line, while its top-line declined, by effectively controlling its costs. This brought about to a margin expansion and profitability over time. Viewing growth from a sector-level, the US electronic industry has been growing its average earnings by double-digit 22.40% over the prior twelve months, and 10.71% over the past five. This shows that any uplift the industry is profiting from, Bonso Electronics International has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research Bonso Electronics International to get a more holistic view of the stock by looking at:
-
1. Financial Health: Is BNSO’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.
-
2. Valuation: What is BNSO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BNSO is currently mispriced by the market.
-
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.