U.S. Markets closed

Want To Invest In Nexteer Automotive Group Limited (HKG:1316)? Here's How It Performed Lately

Simply Wall St

In this article, I will take a look at Nexteer Automotive Group Limited's (SEHK:1316) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, along with how the rest of 1316's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.

Check out our latest analysis for Nexteer Automotive Group

How Did 1316's Recent Performance Stack Up Against Its Past?

1316's trailing twelve-month earnings (from 30 June 2019) of US$311m has declined by -16% 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 19%, indicating the rate at which 1316 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and if the rest of the industry is facing the same headwind.

SEHK:1316 Income Statement, October 17th 2019

In terms of returns from investment, Nexteer Automotive Group has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 10.0% exceeds the HK Auto Components industry of 7.6%, indicating Nexteer Automotive Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Nexteer Automotive Group’s debt level, has declined over the past 3 years from 23% to 15%.

What does this mean?

Though Nexteer Automotive Group's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Nexteer Automotive Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for 1316’s future growth? Take a look at our free research report of analyst consensus for 1316’s outlook.
  2. Financial Health: Are 1316’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.
  3. 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 editorial-team@simplywallst.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.