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When Hopefluent Group Holdings Limited's (HKG:733) announced its latest earnings (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Hopefluent Group Holdings's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 733 actually performed well. Below is a quick commentary on how I see 733 has performed.
Was 733's weak performance lately a part of a long-term decline?
733's trailing twelve-month earnings (from 31 December 2018) of HK$327m has declined by -2.9% 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 17%, indicating the rate at which 733 is growing has slowed down. Why could this be happening? Let's examine what's going on with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Hopefluent Group Holdings has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 5.9% exceeds the HK Real Estate industry of 3.2%, indicating Hopefluent Group Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Hopefluent Group Holdings’s debt level, has increased over the past 3 years from 13% to 17%.
What does this mean?
Hopefluent Group Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I suggest you continue to research Hopefluent Group Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 733’s future growth? Take a look at our free research report of analyst consensus for 733’s outlook.
- Financial Health: Are 733’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.