Does I.T Limited's (HKG:999) Recent Track Record Look Strong?
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When I.T Limited (HKG:999) announced its most recent earnings (28 February 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how I.T performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 999 has performed.
See our latest analysis for I.T
Were 999's earnings stronger than its past performances and the industry?
999's trailing twelve-month earnings (from 28 February 2019) of HK$443m has increased by 2.8% 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 13%, indicating the rate at which 999 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, I.T has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 7.5% exceeds the HK Specialty Retail industry of 6.5%, indicating I.T has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for I.T’s debt level, has increased over the past 3 years from 11% to 18%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 71% to 32% over the past 5 years.
What does this mean?
I.T's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While I.T has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research I.T to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 999’s future growth? Take a look at our free research report of analyst consensus for 999’s outlook.
Financial Health: Are 999’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 28 February 2019. 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 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. Thank you for reading.
