Measuring China Railway Signal & Communication Corporation Limited’s (SEHK:3969) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 3969’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for China Railway Signal & Communication

How Did 3969’s Recent Performance Stack Up Against Its Past?

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to examine different companies in a uniform manner using the latest information. For China Railway Signal & Communication, its latest earnings (trailing twelve month) is CN¥3.33B, which compared to the previous year’s figure, has increased by 12.34%. Since these figures are relatively short-term thinking, I’ve determined an annualized five-year value for 3969’s net income, which stands at CN¥2.47B This means generally, China Railway Signal & Communication has been able to increasingly raise its profits over the last couple of years as well.

What’s enabled this growth? Well, let’s take a look at if it is solely owing to an industry uplift, or if China Railway Signal & Communication has seen some company-specific growth. The hike in earnings seems to be bolstered by a substantial top-line increase beating its growth rate of expenses. Though this resulted in a margin contraction, it has made China Railway Signal & Communication more profitable. Looking at growth from a sector-level, the HK electronic industry has been growing its average earnings by double-digit 17.70% in the past year, and a more subdued 8.63% over the past five years. This means that any uplift the industry is benefiting from, China Railway Signal & Communication has not been able to reap as much as its industry peers.

What does this mean?

Though China Railway Signal & Communication’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as China Railway Signal & Communication gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research China Railway Signal & Communication to get a more holistic view of the stock by looking at: