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Does Human Health Holdings Limited's (HKG:1419) 10% Earnings Growth Make It An Outperformer?

Simply Wall St

For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Human Health Holdings Limited (SEHK:1419) useful as an attempt to give more color around how Human Health Holdings is currently performing.

Check out our latest analysis for Human Health Holdings

How Well Did 1419 Perform?

1419's trailing twelve-month earnings (from 30 June 2019) of HK$27m has jumped 10% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -10.0%, indicating the rate at which 1419 is growing has accelerated. What's enabled this growth? Let's see if it is merely a result of industry tailwinds, or if Human Health Holdings has seen some company-specific growth.

SEHK:1419 Income Statement, January 14th 2020

In terms of returns from investment, Human Health Holdings has fallen short of achieving a 20% return on equity (ROE), recording 8.4% instead. However, its return on assets (ROA) of 6.2% exceeds the HK Healthcare industry of 4.3%, indicating Human Health Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Human Health Holdings’s debt level, has declined over the past 3 years from 23% to 11%.

What does this mean?

While past data is useful, it 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 recommend you continue to research Human Health Holdings to get a more holistic view of the stock by looking at:

  1. Financial Health: Are 1419’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.
  2. Valuation: What is 1419 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1419 is currently mispriced by the market.
  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 30 June 2019. This may not be consistent with full year annual report figures.

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.

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. Thank you for reading.