China Railway Signal & Communication Corporation Limited (HKG:3969): Has Recent Earnings Growth Beaten Long-Term Trend?
When China Railway Signal & Communication Corporation Limited (SEHK:3969) announced its most recent earnings (30 September 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well China Railway Signal & Communication has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see 3969 has performed.
Check out our latest analysis for China Railway Signal & Communication
How Well Did 3969 Perform?
3969's trailing twelve-month earnings (from 30 September 2019) of CN¥3.8b has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which 3969 is growing has accelerated. What's enabled this growth? Let's take a look at whether it is solely a result of an industry uplift, or if China Railway Signal & Communication has seen some company-specific growth.
In terms of returns from investment, China Railway Signal & Communication has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 3.6% is below the HK Electronic industry of 5.2%, indicating China Railway Signal & Communication's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for China Railway Signal & Communication’s debt level, has declined over the past 3 years from 14% to 9.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 2.7% to 4.9% over the past 5 years.
What does this mean?
China Railway Signal & Communication's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research China Railway Signal & Communication to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 3969’s future growth? Take a look at our free research report of analyst consensus for 3969’s outlook.
Financial Health: Are 3969’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 30 September 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.
