Analyzing First Resources Limited’s (SGX:EB5) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess EB5’s recent performance announced on 30 September 2017 and compare these figures to its long-term trend and industry movements. See our latest analysis for First Resources
How EB5 fared against its long-term earnings performance and its industry
I 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 analyze different companies on a similar basis, using new information. “For First Resources, its “, most recent earnings is $161.6M, which, relative to last year’s figure, has increased by a substantial 89.47%. Given that these values may be relatively short-term, I have determined an annualized five-year figure for First Resources’s net income, which stands at $176.0M. This suggests that, while earnings growth from last year was positive, over the past couple of years, First Resources’s earnings have been deteriorating on average.
Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is facing the same headwind. Revenue growth over the past few years, has been positive, however earnings growth has been falling. This suggest that First Resources has been growing expenses, which is hurting margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the SG food industry has been amplifying average earnings growth of 54.02% in the past year, . This is a a notable turnaround from a volatile drop of -10.70% in the past few years. This shows that, in the recent industry expansion, First Resources is able to leverage this to its advantage.
What does this mean?
Though First Resources’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be factors that are influencing the entire industry thus the high industry growth rate over the same period of time. I recommend you continue to research First Resources to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for EB5’s future growth? Take a look at our free research report of analyst consensus for EB5’s outlook.