After looking at The Hong Kong and China Gas Company Limited's (HKG:3) latest earnings announcement (31 December 2018), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Hong Kong and China Gas's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

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See our latest analysis for Hong Kong and China Gas

Commentary On 3's Past Performance

3's trailing twelve-month earnings (from 31 December 2018) of HK$9.3b has jumped 13% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.8%, indicating the rate at which 3 is growing has accelerated. What's enabled this growth? Let's take a look at if it is only because of an industry uplift, or if Hong Kong and China Gas has seen some company-specific growth.

In terms of returns from investment, Hong Kong and China Gas has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 7.6% exceeds the HK Gas Utilities industry of 5.1%, indicating Hong Kong and China Gas has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Hong Kong and China Gas’s debt level, has increased over the past 3 years from 7.6% to 7.9%.

What does this mean?

Hong Kong and China Gas's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Hong Kong and China Gas gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Hong Kong and China Gas to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 3’s future growth? Take a look at our free research report of analyst consensus for 3’s outlook.

2. Financial Health: Are 3’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.