Assessing Baoye Group Company Limited's (SEHK:2355) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 2355's recent performance announced on 30 June 2019 and evaluate these figures to its long-term trend and industry movements.
Did 2355's recent earnings growth beat the long-term trend and the industry?
2355's trailing twelve-month earnings (from 30 June 2019) of CN¥766m has increased by 5.8% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.5%, indicating the rate at which 2355 is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only because of an industry uplift, or if Baoye Group has experienced some company-specific growth.
In terms of returns from investment, Baoye Group has fallen short of achieving a 20% return on equity (ROE), recording 8.9% instead. Furthermore, its return on assets (ROA) of 2.2% is below the HK Construction industry of 5.7%, indicating Baoye Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Baoye Group’s debt level, has declined over the past 3 years from 12% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 17% to 48% over the past 5 years.
What does this mean?
Though Baoye Group's past data is helpful, it is only one aspect of my investment thesis. While Baoye Group 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 Baoye Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 2355’s future growth? Take a look at our free research report of analyst consensus for 2355’s outlook.
- Financial Health: Are 2355’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 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.