Did BII Railway Transportation Technology Holdings Company Limited’s (HKG:1522) Recent Earnings Growth Beat The Trend?
Assessing BII Railway Transportation Technology Holdings Company Limited’s (HKG:1522) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess 1522’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements.
View our latest analysis for BII Railway Transportation Technology Holdings
Did 1522 beat its long-term earnings growth trend and its industry?
1522’s trailing twelve-month earnings (from 31 December 2017) of HK$38.6m has jumped 49.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -23.7%, indicating the rate at which 1522 is growing has accelerated. What’s the driver of this growth? Let’s see if it is merely because of industry tailwinds, or if BII Railway Transportation Technology Holdings has seen some company-specific growth.
Over the last few years, BII Railway Transportation Technology Holdings top-line expansion has overtaken earnings and the growth rate of expenses. Though this has led to a margin contraction, it has moderated BII Railway Transportation Technology Holdings’s earnings contraction.
Looking at growth from a sector-level, the HK software industry has been growing its average earnings by double-digit 49.9% in the past year, and 19.0% over the past five. This growth is a median of profitable companies of 16 Software companies in HK including Digital Hollywood Interactive, OneForce Holdings and Kingsoft.
In terms of returns from investment, BII Railway Transportation Technology Holdings has fallen short of achieving a 20% return on equity (ROE), recording 2.0% instead. Furthermore, its return on assets (ROA) of 1.2% is below the HK Software industry of 7.0%, indicating BII Railway Transportation Technology Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for BII Railway Transportation Technology Holdings’s debt level, has declined over the past 3 years from 6.6% to 2.3%.
What does this mean?
BII Railway Transportation Technology Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. There may be factors that are impacting the industry as a whole, hence the high industry growth rate over the same period of time. You should continue to research BII Railway Transportation Technology Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 1522’s future growth? Take a look at our free research report of analyst consensus for 1522’s outlook.
Financial Health: Are 1522’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 2017. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
