How Does Leoch International Technology Limited's (HKG:842) Earnings Growth Stack Up Against Industry Performance?
After reading Leoch International Technology Limited's (SEHK:842) latest earnings update (31 December 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether 842 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
View our latest analysis for Leoch International Technology
How Did 842's Recent Performance Stack Up Against Its Past?
842's trailing twelve-month earnings (from 31 December 2019) of CN¥133m has jumped 25% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.7%, indicating the rate at which 842 is growing has accelerated. What's the driver of this growth? Let's see if it is solely owing to an industry uplift, or if Leoch International Technology has experienced some company-specific growth.
In terms of returns from investment, Leoch International Technology has fallen short of achieving a 20% return on equity (ROE), recording 3.9% instead. Furthermore, its return on assets (ROA) of 3.6% is below the HK Electrical industry of 4.1%, indicating Leoch International Technology's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Leoch International Technology’s debt level, has declined over the past 3 years from 11% to 6.3%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 52% to 70% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Leoch International Technology has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Leoch International Technology to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 842’s future growth? Take a look at our free research report of analyst consensus for 842’s outlook.
Financial Health: Are 842’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 2019. This may not be consistent with full year annual report figures.
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