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Assessing Johnson Electric Holdings Limited's (HKG:179) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how Johnson Electric Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its electrical industry peers.
View our latest analysis for Johnson Electric Holdings
How 179 fared against its long-term earnings performance and its industry
179's trailing twelve-month earnings (from 31 March 2019) of US$281m has increased by 6.5% 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 7.7%, indicating the rate at which 179 is growing has slowed down. Why could this be happening? Well, let's examine what's going on with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Johnson Electric Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 7.0% exceeds the HK Electrical industry of 3.4%, indicating Johnson Electric Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Johnson Electric Holdings’s debt level, has increased over the past 3 years from 6.2% to 7.1%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Johnson Electric Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Johnson Electric Holdings 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 179’s future growth? Take a look at our free research report of analyst consensus for 179’s outlook.
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Financial Health: Are 179’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 31 March 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.