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Examining Giordano International Limited's (HKG:709) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 709's latest performance announced on 31 December 2018 and weigh these figures against its longer term trend and industry movements.
How Did 709's Recent Performance Stack Up Against Its Past?
709's trailing twelve-month earnings (from 31 December 2018) of HK$480m has declined by -4.0% 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 -1.2%, indicating the rate at which 709 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Giordano International has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 11% exceeds the HK Specialty Retail industry of 6.7%, indicating Giordano International has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Giordano International’s debt level, has increased over the past 3 years from 17% to 19%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 10% to 9.9% over the past 5 years.
What does this mean?
Though Giordano International's past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that face an extended period of diminishing earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I recommend you continue to research Giordano International to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 709’s future growth? Take a look at our free research report of analyst consensus for 709’s outlook.
- Financial Health: Are 709’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.
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. Thank you for reading.