In This Article:
In this article, I will take a look at Zhuzhou CRRC Times Electric Co Ltd’s (HKG:3898) most recent earnings update (30 June 2018) and compare these latest figures against its performance over the past few years, along with how the rest of 3898’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
View our latest analysis for Zhuzhou CRRC Times Electric
Commentary On 3898’s Past Performance
3898’s trailing twelve-month earnings (from 30 June 2018) of CN¥2.4b has declined by -11% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 10%, indicating the rate at which 3898 is growing has slowed down. Why could this be happening? Let’s examine what’s transpiring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Zhuzhou CRRC Times Electric has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 8.6% exceeds the HK Electrical industry of 4.7%, indicating Zhuzhou CRRC Times Electric has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Zhuzhou CRRC Times Electric’s debt level, has declined over the past 3 years from 22% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 1.2% to 1.8% over the past 5 years.
What does this mean?
Zhuzhou CRRC Times Electric’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I suggest you continue to research Zhuzhou CRRC Times Electric to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 3898’s future growth? Take a look at our free research report of analyst consensus for 3898’s outlook.
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Financial Health: Are 3898’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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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.