In This Article:
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Shenzhen Expressway Company Limited’s (HKG:548) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Check out our latest analysis for Shenzhen Expressway
How Did 548’s Recent Performance Stack Up Against Its Past?
548’s trailing twelve-month earnings (from 30 September 2018) of CN¥1.8b has jumped 28% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.4%, indicating the rate at which 548 is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is solely a result of an industry uplift, or if Shenzhen Expressway has experienced some company-specific growth.
In terms of returns from investment, Shenzhen Expressway has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 4.7% is below the HK Infrastructure industry of 5.2%, indicating Shenzhen Expressway’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Shenzhen Expressway’s debt level, has declined over the past 3 years from 7.6% to 6.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 80% to 92% over the past 5 years.
What does this mean?
Though Shenzhen Expressway’s past data is helpful, it is only one aspect of my investment thesis. 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 Shenzhen Expressway 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 548’s future growth? Take a look at our free research report of analyst consensus for 548’s outlook.
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Financial Health: Are 548’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.