For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Pacific Textiles Holdings Limited's (SEHK:1382) 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.

See our latest analysis for Pacific Textiles Holdings

How Did 1382's Recent Performance Stack Up Against Its Past?

1382's trailing twelve-month earnings (from 30 September 2019) of HK$772m has declined by -10% 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 -7.5%, indicating the rate at which 1382 is growing has slowed down. Why is this? Well, let's look at what's occurring with margins and if the rest of the industry is experiencing the hit as well.

In terms of returns from investment, Pacific Textiles Holdings has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the HK Luxury industry of 5.1%, indicating Pacific Textiles Holdings has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Pacific Textiles Holdings’s debt level, has declined over the past 3 years from 32% to 25%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 13% to 20% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Usually companies that experience an extended period of reduction in earnings are going through some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a signal of a structural change, which makes Pacific Textiles Holdings and its peers a riskier investment. I suggest you continue to research Pacific Textiles Holdings to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 1382’s future growth? Take a look at our free research report of analyst consensus for 1382’s outlook.

2. Financial Health: Are 1382’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.

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. Thank you for reading.