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Examining Valuetronics Holdings Limited’s (SGX:BN2) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess BN2’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
Check out our latest analysis for Valuetronics Holdings
Could BN2 beat the long-term trend and outperform its industry?
BN2’s trailing twelve-month earnings (from 30 June 2018) of HK$205.6m has jumped 18.7% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.3%, indicating the rate at which BN2 is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is solely due to industry tailwinds, or if Valuetronics Holdings has experienced some company-specific growth.
In the past couple of years, Valuetronics Holdings increased its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Inspecting growth from a sector-level, the SG electronic industry has been growing its average earnings by double-digit 18.7% over the prior twelve months, and a more muted 4.3% over the past half a decade. This growth is a median of profitable companies of 18 Electronic companies in SG including Jadason Enterprises, PNE Industries and Multi-Chem.
In terms of returns from investment, Valuetronics Holdings has fallen short of achieving a 20% return on equity (ROE), recording 18.5% instead. However, its return on assets (ROA) of 9.4% exceeds the SG Electronic industry of 4.6%, indicating Valuetronics Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Valuetronics Holdings’s debt level, has increased over the past 3 years from 19.5% to 20.6%.
What does this mean?
Valuetronics 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 Valuetronics 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 BN2’s future growth? Take a look at our free research report of analyst consensus for BN2’s outlook.
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Financial Health: Are BN2’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.