After reading Zhuhai Holdings Investment Group Limited’s (HKG:908) latest earnings update (30 June 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether 908 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
View our latest analysis for Zhuhai Holdings Investment Group
Were 908’s earnings stronger than its past performances and the industry?
908’s trailing twelve-month earnings (from 30 June 2018) of CN¥113m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -7.8%, indicating the rate at which 908 is growing has accelerated. How has it been able to do this? Let’s take a look at if it is only because of an industry uplift, or if Zhuhai Holdings Investment Group has experienced some company-specific growth.
In terms of returns from investment, Zhuhai Holdings Investment Group has fallen short of achieving a 20% return on equity (ROE), recording 7.7% instead. Furthermore, its return on assets (ROA) of 0.7% is below the HK Hospitality industry of 4.1%, indicating Zhuhai Holdings Investment Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Zhuhai Holdings Investment Group’s debt level, has increased over the past 3 years from 3.7% to 7.4%.
What does this mean?
Zhuhai Holdings Investment Group’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 recommend you continue to research Zhuhai Holdings Investment Group 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 908’s future growth? Take a look at our free research report of analyst consensus for 908’s outlook.
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Financial Health: Are 908’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.