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Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess AAC Technologies Holdings Inc’s (SEHK:2018) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for AAC Technologies Holdings

How Well Did 2018 Perform?

I prefer to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to assess different stocks in a uniform manner using the latest information. For AAC Technologies Holdings, its most recent bottom-line (trailing twelve month) is CN¥5.32B, which, against last year’s level, has increased by 32.27%. Given that these figures may be somewhat short-term, I have created an annualized five-year value for 2018’s net income, which stands at CN¥2.67B This means that, on average, AAC Technologies Holdings has been able to consistently improve its earnings over the past few years as well.

What’s enabled this growth? Well, let’s take a look at if it is solely owing to an industry uplift, or if AAC Technologies Holdings has experienced some company-specific growth. The ascend in earnings seems to be supported by a strong top-line increase beating its growth rate of costs. Though this resulted in a margin contraction, it has made AAC Technologies Holdings more profitable. Eyeballing growth from a sector-level, the HK electronic industry has been growing, albeit, at a muted single-digit rate of 9.38% in the past twelve months, and 8.82% over the last five years. This shows that any tailwind the industry is profiting from, AAC Technologies Holdings is able to amplify this to its advantage.

What does this mean?

Though AAC Technologies Holdings’s past data is helpful, it is only one aspect of my investment thesis. While AAC Technologies Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research AAC Technologies Holdings to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for 2018’s future growth? Take a look at our free research report of analyst consensus for 2018’s outlook.

• 2. Financial Health: Is 2018’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.

• 3. 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 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.