Assessing Sichuan Expressway Company Limited's (SEHK:107) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 107's recent performance announced on 30 September 2019 and evaluate these figures to its longer term trend and industry movements.
Were 107's earnings stronger than its past performances and the industry?
107's trailing twelve-month earnings (from 30 September 2019) of CN¥1.1b has jumped 28% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.5%, indicating the rate at which 107 is growing has accelerated. What's enabled this growth? Let's see whether it is merely a result of industry tailwinds, or if Sichuan Expressway has experienced some company-specific growth.
In terms of returns from investment, Sichuan Expressway has fallen short of achieving a 20% return on equity (ROE), recording 6.9% instead. Furthermore, its return on assets (ROA) of 4.5% is below the HK Infrastructure industry of 6.3%, indicating Sichuan Expressway's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Sichuan Expressway’s debt level, has declined over the past 3 years from 6.7% to 6.2%.
What does this mean?
Though Sichuan Expressway's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Sichuan Expressway gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Sichuan Expressway to get a better picture of the stock by looking at:
- Financial Health: Are 107’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.
- Valuation: What is 107 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 107 is currently mispriced by the market.
- 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 September 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 firstname.lastname@example.org. 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.
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