Understanding how Anhui Expressway Company Limited (SEHK:995) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how Anhui Expressway is doing by comparing its latest earnings with its long-term trend as well as the performance of its infrastructure industry peers.

See our latest analysis for Anhui Expressway

Commentary On 995's Past Performance

995's trailing twelve-month earnings (from 30 September 2019) of CN¥1.1b has declined by -0.03% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 6.4%, indicating the rate at which 995 is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and if the entire industry is facing the same headwind.

In terms of returns from investment, Anhui Expressway has fallen short of achieving a 20% return on equity (ROE), recording 9.6% instead. However, its return on assets (ROA) of 7.3% exceeds the HK Infrastructure industry of 6.0%, indicating Anhui Expressway has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Anhui Expressway’s debt level, has increased over the past 3 years from 11% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 44% to 24% over the past 5 years.

What does this mean?

Anhui Expressway's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research Anhui Expressway to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 995’s future growth? Take a look at our free research report of analyst consensus for 995’s outlook.

2. Financial Health: Are 995’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 30 September 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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