Examining how Lai Sun Garment (International) Limited (SEHK:191) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Lai Sun Garment (International) is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its real estate industry peers.

See our latest analysis for Lai Sun Garment (International)

How Well Did 191 Perform?

191's trailing twelve-month earnings (from 31 July 2019) of HK$2.8b has increased by 9.0% 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 31%, indicating the rate at which 191 is growing has slowed down. To understand what's happening, let's examine what's occurring with margins and if the whole industry is experiencing the hit as well.

In terms of returns from investment, Lai Sun Garment (International) has fallen short of achieving a 20% return on equity (ROE), recording 9.5% instead. However, its return on assets (ROA) of 3.8% exceeds the HK Real Estate industry of 2.9%, indicating Lai Sun Garment (International) has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Lai Sun Garment (International)’s debt level, has declined over the past 3 years from 3.7% to 1.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 30% to 40% over the past 5 years.

What does this mean?

Lai Sun Garment (International)'s track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Lai Sun Garment (International) to get a better picture of the stock by looking at:

1. Financial Health: Are 191’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 191 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 191 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.