Assessing Progressive Path Group Holdings Limited’s (SEHK:1581) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Progressive Path Group Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its trade distributors industry peers. See our latest analysis for Progressive Path Group Holdings
Did 1581 perform worse than its track record and industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to examine different stocks in a uniform manner using the most relevant data points. “For Progressive Path Group Holdings, its “, latest earnings is HK$23.9M, which, against last year’s figure, has declined by a large -30.92%. Given that these values are relatively myopic, I have estimated an annualized five-year figure for Progressive Path Group Holdings’s net income, which stands at HK$30.3M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been declining over time.
Why could this be happening? Let’s examine what’s occurring with margins and whether the entire industry is facing the same headwind. Revenue growth in the last few years, has been positive, however earnings growth has been declining. This implies that Progressive Path Group Holdings has been increasing expenses, which is hurting margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the HK trade distributors industry has been growing its average earnings by double-digit 10.18% in the previous year, and a less exciting 8.94% over the past couple of years. This suggests that any tailwind the industry is deriving benefit from, Progressive Path Group Holdings has not been able to reap as much as its average peer.
What does this mean?
Progressive Path Group Holdings’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 decline in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry disruption and growth. You should continue to research Progressive Path Group Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is 1581’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.