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When Uni-President China Holdings Ltd (SEHK:220) released its most recent earnings update (31 December 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Uni-President China Holdings's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 220 actually performed well. Below is a quick commentary on how I see 220 has performed.
View our latest analysis for Uni-President China Holdings
How 220 fared against its long-term earnings performance and its industry
220's trailing twelve-month earnings (from 31 December 2019) of CN¥1.4b has jumped 33% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which 220 is growing has accelerated. How has it been able to do this? Let's see if it is only because of an industry uplift, or if Uni-President China Holdings has seen some company-specific growth.
In terms of returns from investment, Uni-President China Holdings has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 5.6% is below the HK Food industry of 6.3%, indicating Uni-President China Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Uni-President China Holdings’s debt level, has increased over the past 3 years from 5.1% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 54% to 8.5% over the past 5 years.
What does this mean?
Uni-President China Holdings'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 Uni-President China Holdings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 220’s future growth? Take a look at our free research report of analyst consensus for 220’s outlook.
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Financial Health: Are 220’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.