Was Sinotruk (Hong Kong) Limited's (HKG:3808) Earnings Growth Better Than The Industry's?
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After reading Sinotruk (Hong Kong) Limited's (HKG:3808) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Sinotruk (Hong Kong)'s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
View our latest analysis for Sinotruk (Hong Kong)
Did 3808's recent earnings growth beat the long-term trend and the industry?
3808's trailing twelve-month earnings (from 31 December 2018) of CN¥4.3b has jumped 44% 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 61%, indicating the rate at which 3808 is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Sinotruk (Hong Kong) has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 7.1% exceeds the HK Machinery industry of 5.3%, indicating Sinotruk (Hong Kong) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sinotruk (Hong Kong)’s debt level, has increased over the past 3 years from 2.2% to 20%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 47% to 11% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Sinotruk (Hong Kong) gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Sinotruk (Hong Kong) to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 3808’s future growth? Take a look at our free research report of analyst consensus for 3808’s outlook.
Financial Health: Are 3808’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.
