Should You Be Concerned With Health Management International Ltd's (SGX:588) -9.8% Earnings Drop?
Examining Health Management International Ltd's (SGX:588) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 588's latest performance announced on 31 March 2019 and weigh these figures against its longer term trend and industry movements.
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Commentary On 588's Past Performance
588's trailing twelve-month earnings (from 31 March 2019) of RM51m has declined by -9.8% 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 27%, indicating the rate at which 588 is growing has slowed down. Why could this be happening? Let's examine what's going on with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Health Management International has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 8.6% exceeds the SG Healthcare industry of 5.8%, indicating Health Management International has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Health Management International’s debt level, has declined over the past 3 years from 21% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 38% to 123% over the past 5 years.
What does this mean?
Though Health Management International's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I suggest you continue to research Health Management International to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 588’s future growth? Take a look at our free research report of analyst consensus for 588’s outlook.
Financial Health: Are 588’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 March 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.
