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Assessing Ouhua Energy Holdings Limited’s (SGX:AJ2) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess AJ2’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Ouhua Energy Holdings
How Well Did AJ2 Perform?
I like 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 allows me to assess different stocks on a similar basis, using new information. For Ouhua Energy Holdings, its most recent earnings (trailing twelve month) is CN¥46.57M, which, relative to last year’s figure, has grown by a somewhat unexciting 8.04%. Given that these figures may be somewhat short-term, I’ve computed an annualized five-year value for Ouhua Energy Holdings’s earnings, which stands at -CN¥31.38M This means on average, Ouhua Energy Holdings has been able to gradually grow its earnings over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is merely attributable to industry tailwinds, or if Ouhua Energy Holdings has experienced some company-specific growth. In the last couple of years, Ouhua Energy Holdings expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Eyeballing growth from a sector-level, the SG oil and gas industry has been growing its average earnings by double-digit 32.19% in the prior twelve months, and 13.86% over the past half a decade. This suggests that whatever uplift the industry is benefiting from, Ouhua Energy Holdings has not been able to realize the gains unlike its average peer.
What does this mean?
Ouhua Energy Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Ouhua Energy Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Ouhua Energy Holdings to get a better picture of the stock by looking at:
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1. Financial Health: Is AJ2’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.
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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 trailing twelve months from 30 September 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.