Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Emperor International Holdings Limited's (SEHK:163) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
How Did 163's Recent Performance Stack Up Against Its Past?
163's trailing twelve-month earnings (from 31 March 2019) of HK$3.1b has declined by -7.0% 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 33%, indicating the rate at which 163 is growing has slowed down. What could be happening here? Let's examine what's occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Emperor International Holdings has fallen short of achieving a 20% return on equity (ROE), recording 9.7% instead. However, its return on assets (ROA) of 6.0% exceeds the HK Real Estate industry of 2.9%, indicating Emperor International Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Emperor International Holdings’s debt level, has declined over the past 3 years from 4.3% to 2.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 50% to 75% over the past 5 years.
What does this mean?
Though Emperor International Holdings's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Emperor International Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 163’s future growth? Take a look at our free research report of analyst consensus for 163’s outlook.
- Financial Health: Are 163’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 March 2019. This may not be consistent with full year annual report figures.
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