Assessing Nanjing Sample Technology Company Limited's (HKG:1708) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how Nanjing Sample Technology is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its electronic industry peers.
Despite a decline, did 1708 underperform the long-term trend and the industry?
1708's trailing twelve-month earnings (from 31 December 2018) of CN¥196m has declined by -9.5% 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 12%, indicating the rate at which 1708 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 facing the same headwind.
In terms of returns from investment, Nanjing Sample Technology has fallen short of achieving a 20% return on equity (ROE), recording 9.3% instead. Furthermore, its return on assets (ROA) of 5.1% is below the HK Electronic industry of 5.2%, indicating Nanjing Sample Technology's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Nanjing Sample Technology’s debt level, has increased over the past 3 years from 8.6% to 11%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research Nanjing Sample Technology to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1708’s future growth? Take a look at our free research report of analyst consensus for 1708’s outlook.
- Financial Health: Are 1708’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.
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