Investors with a long-term horizong may find it valuable to assess Uni-President China Holdings Ltd's (HKG:220) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Uni-President China Holdings is currently performing.
Did 220's recent earnings growth beat the long-term trend and the industry?
220's trailing twelve-month earnings (from 31 December 2018) of CN¥1.0b has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.0%, indicating the rate at which 220 is growing has accelerated. What's enabled this growth? Let's see if it is solely because of industry tailwinds, or if Uni-President China Holdings has seen some company-specific growth.
In terms of returns from investment, Uni-President China Holdings has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. Furthermore, its return on assets (ROA) of 4.2% is below the HK Food industry of 5.5%, indicating Uni-President China Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Uni-President China Holdings’s debt level, has increased over the past 3 years from 6.9% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 73% to 15% over the past 5 years.
What does this mean?
Uni-President China Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Uni-President China Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Uni-President China Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 220’s future growth? Take a look at our free research report of analyst consensus for 220’s outlook.
- Financial Health: Are 220’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.
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.
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