In This Article:
Examining how Hengxin Technology Ltd (HKG:1085) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Hengxin Technology is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its communications industry peers.
View our latest analysis for Hengxin Technology
Did 1085’s recent earnings growth beat the long-term trend and the industry?
1085’s trailing twelve-month earnings (from 30 June 2018) of CN¥117m has declined by -1.1% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.7%, indicating the rate at which 1085 is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Hengxin Technology has fallen short of achieving a 20% return on equity (ROE), recording 7.6% instead. Furthermore, its return on assets (ROA) of 6.2% is below the HK Communications industry of 8.9%, indicating Hengxin Technology’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Hengxin Technology’s debt level, has declined over the past 3 years from 9.5% to 8.8%.
What does this mean?
Though Hengxin Technology’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Hengxin Technology 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 1085’s future growth? Take a look at our free research report of analyst consensus for 1085’s outlook.
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Financial Health: Are 1085’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.