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When Guangdong Yueyun Transportation Company Limited (HKG:3399) released its most recent earnings update (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Guangdong Yueyun Transportation performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 3399 has performed.
See our latest analysis for Guangdong Yueyun Transportation
Could 3399 beat the long-term trend and outperform its industry?
3399’s trailing twelve-month earnings (from 30 June 2018) of CN¥399m has increased by 3.0% 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 25%, indicating the rate at which 3399 is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, Guangdong Yueyun Transportation has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 5.0% exceeds the HK Logistics industry of 5.0%, indicating Guangdong Yueyun Transportation has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Guangdong Yueyun Transportation’s debt level, has declined over the past 3 years from 13% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 46% over the past 5 years.
What does this mean?
Guangdong Yueyun Transportation’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 Guangdong Yueyun Transportation gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Guangdong Yueyun Transportation 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 3399’s future growth? Take a look at our free research report of analyst consensus for 3399’s outlook.
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Financial Health: Are 3399’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.