Assessing Sinosoft Technology Group Limited's (HKG:1297) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess 1297's latest performance announced on 31 December 2018 and evaluate these figures to its historical trend and industry movements.
How Well Did 1297 Perform?
1297's trailing twelve-month earnings (from 31 December 2018) of CN¥236m has increased by 2.9% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which 1297 is growing has slowed down. Why could this be happening? Well, let's examine what's going on with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Sinosoft Technology Group has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 14% exceeds the HK Software industry of 4.9%, indicating Sinosoft Technology Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sinosoft Technology Group’s debt level, has increased over the past 3 years from 19% to 22%.
What does this mean?
Though Sinosoft Technology Group's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Sinosoft Technology Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1297’s future growth? Take a look at our free research report of analyst consensus for 1297’s outlook.
- Financial Health: Are 1297’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 2018. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.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.