After looking at Karrie International Holdings Limited's (SEHK:1050) latest earnings update (31 March 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
Commentary On 1050's Past Performance
1050's trailing twelve-month earnings (from 31 March 2019) of HK$221m has increased by 1.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 31%, indicating the rate at which 1050 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Karrie International Holdings has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 9.7% exceeds the HK Electronic industry of 5.5%, indicating Karrie International Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Karrie International Holdings’s debt level, has increased over the past 3 years from 16% to 18%.
What does this mean?
Though Karrie International Holdings's past data is helpful, it is only one aspect of my investment thesis. While Karrie International Holdings has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Karrie International Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1050’s future growth? Take a look at our free research report of analyst consensus for 1050’s outlook.
- Financial Health: Are 1050’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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