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Does Regal International Airport Group Company Limited's (HKG:357) -3.3% Earnings Drop Reflect A Longer Term Trend?

Simply Wall St

For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Regal International Airport Group Company Limited's (SEHK:357) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.

View our latest analysis for Regal International Airport Group

How Did 357's Recent Performance Stack Up Against Its Past?

357's trailing twelve-month earnings (from 30 June 2019) of CN¥526m has declined by -3.3% 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 11%, indicating the rate at which 357 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the entire industry is feeling the heat.

SEHK:357 Income Statement, November 9th 2019

In terms of returns from investment, Regal International Airport Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 6.4% exceeds the HK Infrastructure industry of 6.0%, indicating Regal International Airport Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Regal International Airport Group’s debt level, has increased over the past 3 years from 10% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 90% to 33% over the past 5 years.

What does this mean?

Regal International Airport Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Regal International Airport Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for 357’s future growth? Take a look at our free research report of analyst consensus for 357’s outlook.
  2. Financial Health: Are 357’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 30 June 2019. 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.