Today I will take a look at CIMC Enric Holdings Limited's (HKG:3899) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the machinery industry performed. As an investor, I find it beneficial to assess 3899’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Commentary On 3899's Past Performance
3899's trailing twelve-month earnings (from 30 June 2019) of CN¥860m has jumped 32% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -4.0%, indicating the rate at which 3899 is growing has accelerated. What's the driver of this growth? Let's see if it is only due to an industry uplift, or if CIMC Enric Holdings has experienced some company-specific growth.
In terms of returns from investment, CIMC Enric Holdings has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 5.8% exceeds the HK Machinery industry of 5.5%, indicating CIMC Enric Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for CIMC Enric Holdings’s debt level, has increased over the past 3 years from 8.0% to 14%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While CIMC Enric Holdings has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research CIMC Enric Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 3899’s future growth? Take a look at our free research report of analyst consensus for 3899’s outlook.
- Financial Health: Are 3899’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 2019. This may not be consistent with full year annual report figures.
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