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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Kingboard Laminates Holdings Limited (HKG:1888) useful as an attempt to give more color around how Kingboard Laminates Holdings is currently performing.
View our latest analysis for Kingboard Laminates Holdings
Despite a decline, did 1888 underperform the long-term trend and the industry?
1888's trailing twelve-month earnings (from 31 December 2018) of HK$3.3b has declined by -14% 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 30%, indicating the rate at which 1888 is growing has slowed down. Why could this be happening? Let's examine what's occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Kingboard Laminates Holdings has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 12% exceeds the HK Electronic industry of 5.1%, indicating Kingboard Laminates Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Kingboard Laminates Holdings’s debt level, has increased over the past 3 years from 7.5% to 20%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 38% to 33% over the past 5 years.
What does this mean?
Though Kingboard Laminates Holdings's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research Kingboard Laminates 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 1888’s future growth? Take a look at our free research report of analyst consensus for 1888’s outlook.
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Financial Health: Are 1888’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.