Examining how Shui On Land Limited (HKG:272) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Shui On Land is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its real estate industry peers.
How Well Did 272 Perform?
272's trailing twelve-month earnings (from 30 June 2019) of CN¥2.0b has increased by 0.6% 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 4.2%, indicating the rate at which 272 is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, Shui On Land has fallen short of achieving a 20% return on equity (ROE), recording 5.0% instead. Furthermore, its return on assets (ROA) of 2.8% is below the HK Real Estate industry of 2.9%, indicating Shui On Land's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Shui On Land’s debt level, has increased over the past 3 years from 1.2% to 6.2%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 98% to 81% over the past 5 years.
What does this mean?
Shui On Land's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Shui On Land has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Shui On Land to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 272’s future growth? Take a look at our free research report of analyst consensus for 272’s outlook.
- Financial Health: Are 272’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 30 June 2019. 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 email@example.com. 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.