In This Article:
In this commentary, I will examine Yantai North Andre Juice Company Limited’s (HKG:2218) latest earnings update (30 June 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the food industry performed. As an investor, I find it beneficial to assess 2218’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
View our latest analysis for Yantai North Andre Juice
Did 2218 perform worse than its track record and industry?
2218’s trailing twelve-month earnings (from 30 June 2018) of CN¥103m has declined by -13% 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 2.2%, indicating the rate at which 2218 is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Yantai North Andre Juice has fallen short of achieving a 20% return on equity (ROE), recording 6.0% instead. Furthermore, its return on assets (ROA) of 5.6% is below the HK Food industry of 6.0%, indicating Yantai North Andre Juice’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Yantai North Andre Juice’s debt level, has increased over the past 3 years from 4.1% to 8.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 19% to 1.2% over the past 5 years.
What does this mean?
Yantai North Andre Juice’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that endure a drawn out period of reduction in earnings are going through some sort of reinvestment phase in order to keep up with the latest industry disruption and expansion. I suggest you continue to research Yantai North Andre Juice 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 2218’s future growth? Take a look at our free research report of analyst consensus for 2218’s outlook.
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Financial Health: Are 2218’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.