Understanding how Leyou Technologies Holdings Limited (SEHK:1089) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how Leyou Technologies Holdings is doing by comparing its latest earnings with its long-term trend as well as the performance of its entertainment industry peers.
Was 1089's weak performance lately a part of a long-term decline?
1089's trailing twelve-month earnings (from 30 June 2019) of US$17m has declined by -15% 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 68%, indicating the rate at which 1089 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 entire industry is experiencing the hit as well.
In terms of returns from investment, Leyou Technologies Holdings has fallen short of achieving a 20% return on equity (ROE), recording 6.8% instead. Furthermore, its return on assets (ROA) of 5.2% is below the HK Entertainment industry of 6.6%, indicating Leyou Technologies Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Leyou Technologies Holdings’s debt level, has increased over the past 3 years from 16% to 21%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 35% to 15% over the past 5 years.
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 affecting its business. You should continue to research Leyou Technologies Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1089’s future growth? Take a look at our free research report of analyst consensus for 1089’s outlook.
- Financial Health: Are 1089’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.