Should You Be Happy With Leoch International Technology Limited’s (HKG:842) Performance Lately?
When Leoch International Technology Limited (HKG:842) announced its most recent earnings (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Leoch International Technology has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see 842 has performed.
View our latest analysis for Leoch International Technology
Did 842’s recent performance beat its trend and industry?
842’s trailing twelve-month earnings (from 30 June 2018) of CN¥219m has declined by -1.0% 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 50%, indicating the rate at which 842 is growing has slowed down. Why is this? Let’s examine what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, Leoch International Technology has fallen short of achieving a 20% return on equity (ROE), recording 8.2% instead. Furthermore, its return on assets (ROA) of 4.5% is below the HK Electrical industry of 4.9%, indicating Leoch International Technology’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Leoch International Technology’s debt level, has increased over the past 3 years from 1.2% to 7.7%.
What does this mean?
Though Leoch International Technology’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Leoch International Technology to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 842’s future growth? Take a look at our free research report of analyst consensus for 842’s outlook.
Financial Health: Are 842’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
