After looking at Far East Orchard Limited's (SGX:O10) latest earnings announcement (30 September 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Far East Orchard's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

See our latest analysis for Far East Orchard

Commentary On O10's Past Performance

O10's trailing twelve-month earnings (from 30 September 2019) of S$29m has jumped 30% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -8.3%, indicating the rate at which O10 is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is only because of an industry uplift, or if Far East Orchard has seen some company-specific growth.

In terms of returns from investment, Far East Orchard has fallen short of achieving a 20% return on equity (ROE), recording 2.3% instead. Furthermore, its return on assets (ROA) of 1.6% is below the SG Real Estate industry of 3.1%, indicating Far East Orchard's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Far East Orchard’s debt level, has increased over the past 3 years from 0.9% to 1.2%.

What does this mean?

Though Far East Orchard'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. You should continue to research Far East Orchard to get a better picture of the stock by looking at:

1. Financial Health: Are O10’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.

2. Valuation: What is O10 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether O10 is currently mispriced by the market.

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 30 September 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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