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Does Hollysys Automation Technologies Ltd.’s (NASDAQ:HOLI) 28% Earnings Growth Make It An Outperformer?

Simply Wall St

Examining Hollysys Automation Technologies Ltd.’s (NASDAQ:HOLI) 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 HOLI’s latest performance announced on 31 December 2018 and weigh these figures against its longer term trend and industry movements.

See our latest analysis for Hollysys Automation Technologies

Did HOLI’s recent earnings growth beat the long-term trend and the industry?

HOLI’s trailing twelve-month earnings (from 31 December 2018) of US$122m has jumped 28% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.2%, indicating the rate at which HOLI is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is solely due to industry tailwinds, or if Hollysys Automation Technologies has experienced some company-specific growth.

NasdaqGS:HOLI Income Statement, March 4th 2019

In terms of returns from investment, Hollysys Automation Technologies has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 8.8% exceeds the US Electronic industry of 7.1%, indicating Hollysys Automation Technologies has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Hollysys Automation Technologies’s debt level, has declined over the past 3 years from 23% to 14%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Hollysys Automation Technologies gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Hollysys Automation Technologies to get a better picture of the stock by looking at:

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