Digger deaper into earnings and returns
/An interesting point is that t
Source: Vietecon.com calculations
Following up on my posts yesterday, I found a few other interesting things. One was that net income is not correlated to revenue all that much. This is something that we should always keep in mind: you can spend a lot of money to sell lots of something but at the end of the day, have very little profit. The last few years has tons of examples of companies growing revenues but still loosing millions/billions!. Here’s looking at you, Uber, WeWork, DoorDash, Lyft, etc.
I put together this small comp table to give a sense of the bigger companies. These are the 20 stocks that I used for my calculations.
A few points here:
VCB was cheap! The reason I say that is the company is trading at a 17.9x trailing P/E despite being up 51%,. That means at the beginning of the year, it was trading on just a 11.8x forward P/E. But net income did increase 51%, so I guess it is in line.
VinGroup is so expensive. Net income growth was good, and it probably will continue to show good growth. But it is trading at a trailing P/E of 77.5x. Ouch. If the price stayed the same, net income would have to grow a bit under 4x to be 20x P/E. It is making some big bets: phones, cars, etc. So it’s possible.
VHM and NVL are both developers and therefore hard to quickly size up. VHM had massive growth in revenues (+69%) and income (+41%), and the share price was up just 15%. NVL saw revenues up 42%, but net income down (!) 23%. The stock crashed 18%. Now the important thing to know is that accounting for real estate is not straightforward. You might recognize lots of expenses for a project (like overhead, etc) but then only recognize the revenue at time of delivery, 2-3 years down the road. And revenues can be heavily weighted to one year: if you are delivering a big project, you might recognize the revenue of 1,000 homes in one year, and none the next year. So it is hard to say much looking at just revenues and net income. Better to look at the land bank and the pipeline.
Banks are all over the place. There are 6 banks in the data. Three (VCB, BID, and MBB) saw great performance, average return of 21%. The three others (TCB, CTG, VPB) were down 16%! I thought this was mainly because state-owned banks did better, and that might be partly true, but doesn’t explain all of it.
Gotta go now, but may do a bit more on this on Monday. Hope the weekend is starting well.
