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When C Cheng Holdings Limited (HKG:1486) released its most recent earnings update (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well C Cheng Holdings has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see 1486 has performed.

View our latest analysis for C Cheng Holdings

How 1486 fared against its long-term earnings performance and its industry

1486's trailing twelve-month earnings (from 31 December 2018) of HK$47m has jumped 40% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which 1486 is growing has accelerated. How has it been able to do this? Let's take a look at whether it is merely attributable to industry tailwinds, or if C Cheng Holdings has seen some company-specific growth.

In terms of returns from investment, C Cheng Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 6.5% exceeds the HK Professional Services industry of 6.4%, indicating C Cheng Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for C Cheng Holdings’s debt level, has declined over the past 3 years from 20% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 4.4% to 12% over the past 5 years.

What does this mean?

C Cheng Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research C Cheng Holdings to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 1486’s future growth? Take a look at our free research report of analyst consensus for 1486’s outlook.

2. Financial Health: Are 1486’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.

3. 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.