Today I will take a look at TA Corporation Ltd’s (SGX:PA3) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the construction industry performed. As an investor, I find it beneficial to assess PA3’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for PA3
Was PA3’s recent earnings decline indicative of a tough track record?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to examine many different companies on a similar basis, using new information. TA’s most recent bottom-line -SGD12.0M, which, relative to the previous year’s figure, has become more negative. Given that these figures are somewhat short-term thinking, I have computed an annualized five-year value for PA3’s net income, which stands at SGD12.9M.
We can further examine TA’s loss by researching 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 past couple of years has been negative at -5.64%. The key to profitability here is to make sure the company’s cost growth is well-managed. Inspecting growth from a sector-level, the SG construction industry has been enduring some headwinds over the previous few years, leading to an average earnings drop of -8.11% in the most recent year. This means any near-term the industry is experiencing, it’s hitting TA harder than its peers.
What does this mean?
Though TA’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues TA may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research TA to get a better picture of the stock by looking at:
1. Financial Health: Is PA3’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. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.