Should Nanyang Holdings Limited's (HKG:212) Recent Earnings Decline Worry You?
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After reading Nanyang Holdings Limited's (HKG:212) latest earnings update (31 December 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 212 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 Nanyang Holdings
How Did 212's Recent Performance Stack Up Against Its Past?
212's trailing twelve-month earnings (from 31 December 2018) of HK$335m has declined by -5.8% 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 10%, indicating the rate at which 212 is growing has slowed down. Why could this be happening? Let's examine what's transpiring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Nanyang Holdings has fallen short of achieving a 20% return on equity (ROE), recording 7.0% instead. However, its return on assets (ROA) of 6.9% exceeds the HK Real Estate industry of 3.3%, indicating Nanyang Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Nanyang Holdings’s debt level, has declined over the past 3 years from 2.5% to 1.7%.
What does this mean?
Nanyang Holdings'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 volatile earnings, can have many factors influencing its business. I suggest you continue to research Nanyang Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 212’s future growth? Take a look at our free research report of analyst consensus for 212’s outlook.
Financial Health: Are 212’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 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.
