Does China Lesso Group Holdings Limited’s (HKG:2128) Recent Track Record Look Strong?
Assessing China Lesso Group Holdings Limited’s (HKG:2128) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess 2128’s latest performance announced on 30 June 2018 and evaluate these figures to its historical trend and industry movements.
See our latest analysis for China Lesso Group Holdings
How 2128 fared against its long-term earnings performance and its industry
2128’s trailing twelve-month earnings (from 30 June 2018) of CN¥2.4b has jumped 19% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which 2128 is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is merely a result of an industry uplift, or if China Lesso Group Holdings has experienced some company-specific growth.
In terms of returns from investment, China Lesso Group Holdings has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 8.0% exceeds the HK Building industry of 3.5%, indicating China Lesso Group Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for China Lesso Group Holdings’s debt level, has declined over the past 3 years from 19% to 13%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 41% to 79% over the past 5 years.
What does this mean?
China Lesso Group 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 suggest you continue to research China Lesso Group Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 2128’s future growth? Take a look at our free research report of analyst consensus for 2128’s outlook.
Financial Health: Are 2128’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 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.