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After looking at Chow Tai Fook Jewellery Group Limited's (HKG:1929) latest earnings announcement (31 March 2019), 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 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.
See our latest analysis for Chow Tai Fook Jewellery Group
Could 1929 beat the long-term trend and outperform its industry?
1929's trailing twelve-month earnings (from 31 March 2019) of HK$4.6b has jumped 12% 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 1929 is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is only a result of industry tailwinds, or if Chow Tai Fook Jewellery Group has seen some company-specific growth.
In terms of returns from investment, Chow Tai Fook Jewellery Group has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 7.7% exceeds the HK Specialty Retail industry of 6.5%, indicating Chow Tai Fook Jewellery Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Chow Tai Fook Jewellery Group’s debt level, has increased over the past 3 years from 11% to 19%.
What does this mean?
Though Chow Tai Fook Jewellery Group's past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be factors that are affecting the entire industry thus the high industry growth rate over the same period of time. I suggest you continue to research Chow Tai Fook Jewellery Group 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 1929’s future growth? Take a look at our free research report of analyst consensus for 1929’s outlook.
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Financial Health: Are 1929’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.