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Assessing Xingda International Holdings Limited's (HKG:1899) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 1899's recent performance announced on 31 December 2018 and evaluate these figures to its longer term trend and industry movements.
Check out our latest analysis for Xingda International Holdings
Was 1899's weak performance lately a part of a long-term decline?
1899's trailing twelve-month earnings (from 31 December 2018) of CN¥264m has declined by -8.2% 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 -8.1%, indicating the rate at which 1899 is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, Xingda International Holdings has fallen short of achieving a 20% return on equity (ROE), recording 4.9% instead. Furthermore, its return on assets (ROA) of 2.1% is below the HK Auto Components industry of 7.9%, indicating Xingda International Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Xingda International Holdings’s debt level, has increased over the past 3 years from 2.6% to 4.6%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Generally companies that experience an extended period of diminishing earnings are undergoing some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a signal of a structural shift, which makes Xingda International Holdings and its peers a higher risk investment. I suggest you continue to research Xingda International Holdings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 1899’s future growth? Take a look at our free research report of analyst consensus for 1899’s outlook.
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Financial Health: Are 1899’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.