When Bar Pacific Group Holdings Limited (SEHK:8432) released its most recent earnings update (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Bar Pacific Group Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 8432 actually performed well. Below is a quick commentary on how I see 8432 has performed. View our latest analysis for Bar Pacific Group Holdings
Were 8432’s earnings stronger than its past performances and the industry?
I look at 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 technique enables me to assess different companies in a uniform manner using the latest information. “For Bar Pacific Group Holdings, its “, latest earnings is HK$1.7M, which, relative to last year’s level, has risen by an impressive 93.92%. Since these values may be fairly short-term thinking, I’ve estimated an annualized five-year value for Bar Pacific Group Holdings’s earnings, which stands at HK$2.2M. This means while earnings increased from last year’s level, over the past couple of years, Bar Pacific Group Holdings’s earnings have been diminishing on average.
Why is this? Well, let’s look at what’s occurring with margins and whether the rest of the industry is experiencing the hit as well. Revenue growth in the past couple of years, has been positive, nevertheless earnings growth has been declining. This implies that Bar Pacific Group Holdings has been growing expenses, which is harming margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the HK hospitality industry has been enduring some headwinds over the last couple of years, leading to an average earnings drop of -8.14% in the most recent year. This suggests that any recent headwind the industry is enduring, Bar Pacific Group Holdings is less exposed compared to its peers.
What does this mean?
Bar Pacific Group Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook.
I recommend you continue to research Bar Pacific Group Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is 8432’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.