Examining Art Group Holdings Limited's (SEHK:565) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 565's latest performance announced on 30 June 2019 and compare these figures to its longer term trend and industry movements.
Commentary On 565's Past Performance
565's trailing twelve-month earnings (from 30 June 2019) of HK$56m has declined by -17% 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 23%, indicating the rate at which 565 is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Art Group Holdings has fallen short of achieving a 20% return on equity (ROE), recording 4.1% instead. Furthermore, its return on assets (ROA) of 2.7% is below the HK Real Estate industry of 2.9%, indicating Art Group Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Art Group Holdings’s debt level, has increased over the past 3 years from 2.6% to 4.5%.
What does this mean?
Art Group Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Typically companies that experience an extended period of decline in earnings are going through some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a signal of a structural shift, which makes Art Group Holdings and its peers a riskier investment. I recommend you continue to research Art Group Holdings to get a better picture of the stock by looking at:
- Financial Health: Are 565’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.
- Valuation: What is 565 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 565 is currently mispriced by the market.
- 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 June 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 email@example.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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