For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Techtronic Industries Company Limited's (SEHK:669) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.

View our latest analysis for Techtronic Industries

Did 669's recent earnings growth beat the long-term trend and the industry?

669's trailing twelve-month earnings (from 31 December 2019) of US$615m has jumped 11% 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 15%, indicating the rate at which 669 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the whole industry is experiencing the hit as well.

In terms of returns from investment, Techtronic Industries has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 8.1% exceeds the HK Machinery industry of 4.9%, indicating Techtronic Industries has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Techtronic Industries’s debt level, has increased over the past 3 years from 15% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 48% to 44% over the past 5 years.

What does this mean?

Techtronic Industries'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? You should continue to research Techtronic Industries to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 669’s future growth? Take a look at our free research report of analyst consensus for 669’s outlook.

2. Financial Health: Are 669’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.

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.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.

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.

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