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After reading BYD Electronic (International) Company Limited’s (HKG:285) most recent earnings announcement (30 June 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
View our latest analysis for BYD Electronic (International)
Did 285’s recent earnings growth beat the long-term trend and the industry?
285’s trailing twelve-month earnings (from 30 June 2018) of CN¥2.4b has jumped 23% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 31%, indicating the rate at which 285 is growing has slowed down. What could be happening here? Well, let’s examine what’s going on with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, BYD Electronic (International) has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 9.6% exceeds the HK Communications industry of 8.9%, indicating BYD Electronic (International) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for BYD Electronic (International)’s debt level, has increased over the past 3 years from 6.6% to 14%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as BYD Electronic (International) gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research BYD Electronic (International) 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 285’s future growth? Take a look at our free research report of analyst consensus for 285’s outlook.
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Financial Health: Are 285’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 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.