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Does Bonvests Holdings Limited's (SGX:B28) Past Performance Indicate A Weaker Future?

Simply Wall St

After reading Bonvests Holdings Limited's (SGX:B28) 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 Bonvests Holdings's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

Check out our latest analysis for Bonvests Holdings

Was B28's recent earnings decline indicative of a tough track record?

B28's trailing twelve-month earnings (from 31 December 2018) of S$12m has declined by -8.0% 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 -20%, indicating the rate at which B28 is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the whole industry is facing the same headwind.

SGX:B28 Income Statement, April 24th 2019

In terms of returns from investment, Bonvests Holdings has fallen short of achieving a 20% return on equity (ROE), recording 1.4% instead. Furthermore, its return on assets (ROA) of 1.5% is below the SG Industrials industry of 2.4%, indicating Bonvests Holdings's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Bonvests Holdings’s debt level, has declined over the past 3 years from 3.7% to 2.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 36% over the past 5 years.

What does this mean?

Bonvests 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 face a drawn out period of decline in earnings are undergoing some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes Bonvests Holdings and its peers a riskier investment. I suggest you continue to research Bonvests Holdings to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for B28’s future growth? Take a look at our free research report of analyst consensus for B28’s outlook.
  2. Financial Health: Are B28’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.
  3. 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.