When Micro-Mechanics (Holdings) Ltd. (SGX:5DD) released its most recent earnings update (30 September 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Micro-Mechanics (Holdings) has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see 5DD has performed.
Have 5DD’s earnings improved against past performances and the industry?
5DD’s trailing twelve-month earnings (from 30 September 2018) of S$16m has declined by -0.4% 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 18%, indicating the rate at which 5DD is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Micro-Mechanics (Holdings) has invested its equity funds well leading to a 26% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 21% exceeds the SG Semiconductor industry of 17%, indicating Micro-Mechanics (Holdings) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Micro-Mechanics (Holdings)’s debt level, has increased over the past 3 years from 29% to 30%.
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 influencing its business. You should continue to research Micro-Mechanics (Holdings) to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 5DD’s future growth? Take a look at our free research report of analyst consensus for 5DD’s outlook.
- Financial Health: Are 5DD’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 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.