When Yongsheng Advanced Materials Company Limited (SEHK:3608) announced its most recent earnings (30 June 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Yongsheng Advanced Materials 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 3608 has performed.

View our latest analysis for Yongsheng Advanced Materials

Was 3608's recent earnings decline indicative of a tough track record?

3608's trailing twelve-month earnings (from 30 June 2019) of CN¥82m has declined by -9.1% 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 13%, indicating the rate at which 3608 is growing has slowed down. Why is this? Well, let's look at what's going on with margins and whether the entire industry is experiencing the hit as well.

In terms of returns from investment, Yongsheng Advanced Materials has fallen short of achieving a 20% return on equity (ROE), recording 6.7% instead. Furthermore, its return on assets (ROA) of 4.8% is below the HK Luxury industry of 5.3%, indicating Yongsheng Advanced Materials's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Yongsheng Advanced Materials’s debt level, has declined over the past 3 years from 18% to 6.7%.

What does this mean?

Yongsheng Advanced Materials's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Yongsheng Advanced Materials to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 3608’s future growth? Take a look at our free research report of analyst consensus for 3608’s outlook.

2. Financial Health: Are 3608’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 30 June 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.