After reading Broadway Industrial Group Limited’s (SGX:B69) 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 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 Broadway Industrial Group
Commentary On B69’s Past Performance
I prefer to use data from the most recent 12 months, 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 analyze different companies on a more comparable basis, using the most relevant data points. For Broadway Industrial Group, its latest earnings is -SGD28.4M, which, against last year’s level, has become less negative. Since these values are fairly nearsighted, I’ve computed an annualized five-year value for B69’s net income, which stands at -SGD15.6M. This suggests that, Broadway Industrial Group has historically performed better than recently, though it seems like earnings are now heading back towards a more favorable position once more.
Additionally, we can examine Broadway Industrial Group’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has been negative at -7.24%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the SG electronic industry has been growing its average earnings by double-digit 21.81% in the past twelve months, and a flatter 0.54% over the past five. This means that, even though Broadway Industrial Group is currently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Broadway Industrial Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Broadway Industrial Group may be facing and whether management guidance has steadily been met in the past. You should continue to research Broadway Industrial Group to get a better picture of the stock by looking at: