For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Yadea Group Holdings Ltd.'s (HKG:1585) 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.
Were 1585's earnings stronger than its past performances and the industry?
1585's trailing twelve-month earnings (from 31 December 2018) of CN¥431m has increased by 6.5% 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 12%, indicating the rate at which 1585 is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Yadea Group Holdings has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 5.2% exceeds the HK Auto industry of 3.5%, indicating Yadea Group Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Yadea Group Holdings’s debt level, has declined over the past 3 years from 50% to 11%.
What does this mean?
Though Yadea Group Holdings'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 Yadea Group Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1585’s future growth? Take a look at our free research report of analyst consensus for 1585’s outlook.
- Financial Health: Are 1585’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.
- 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 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.