International Housewares Retail Company Limited (HKG:1373): Has Recent Earnings Growth Beaten Long-Term Trend?
When International Housewares Retail Company Limited (HKG:1373) released its most recent earnings update (30 April 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how International Housewares Retail performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 1373 has performed.
View our latest analysis for International Housewares Retail
How Did 1373’s Recent Performance Stack Up Against Its Past?
1373’s trailing twelve-month earnings (from 30 April 2018) of HK$105m has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -9.4%, indicating the rate at which 1373 is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is merely because of industry tailwinds, or if International Housewares Retail has seen some company-specific growth.
In terms of returns from investment, International Housewares Retail has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 10% exceeds the HK Specialty Retail industry of 7.1%, indicating International Housewares Retail has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for International Housewares Retail’s debt level, has increased over the past 3 years from 14% to 17%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 23% to 4.8% over the past 5 years.
What does this mean?
International Housewares Retail’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research International Housewares Retail to get a better picture of the stock by looking at:
Financial Health: Are 1373’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.
Valuation: What is 1373 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1373 is currently mispriced by the market.
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 April 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.
