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Measuring China Water Affairs Group Limited’s (HKG:855) track record of past performance is a useful exercise for investors. It enables 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 855’s recent performance announced on 31 March 2018 and weigh these figures against its long-term trend and industry movements.
Check out our latest analysis for China Water Affairs Group
Were 855’s earnings stronger than its past performances and the industry?
855’s trailing twelve-month earnings (from 31 March 2018) of HK$1.1b has jumped 34% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 31%, indicating the rate at which 855 is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is solely attributable to industry tailwinds, or if China Water Affairs Group has seen some company-specific growth.
In terms of returns from investment, China Water Affairs Group has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 4.5% is below the HK Water Utilities industry of 4.8%, indicating China Water Affairs Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for China Water Affairs Group’s debt level, has increased over the past 3 years from 8.5% to 13%.
What does this mean?
China Water Affairs Group’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 China Water Affairs Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research China Water Affairs Group to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 855’s future growth? Take a look at our free research report of analyst consensus for 855’s outlook.
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Financial Health: Are 855’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 31 March 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.