For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Kingston Financial Group Limited’s (HKG:1031) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
View our latest analysis for Kingston Financial Group
Despite a decline, did 1031 underperform the long-term trend and the industry?
1031’s trailing twelve-month earnings (from 31 March 2018) of HK$1.3b has declined by -9.2% 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 18%, indicating the rate at which 1031 is growing has slowed down. Why is this? Let’s examine what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Kingston Financial Group has fallen short of achieving a 20% return on equity (ROE), recording 6.6% instead. However, its return on assets (ROA) of 3.5% exceeds the HK Capital Markets industry of 2.9%, indicating Kingston Financial Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Kingston Financial Group’s debt level, has declined over the past 3 years from 7.7% to 7.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 28% to 70% over the past 5 years.
What does this mean?
Though Kingston Financial Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Kingston Financial Group to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for 1031’s future growth? Take a look at our free research report of analyst consensus for 1031’s outlook.
-
Financial Health: Are 1031’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.
-
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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.