Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Red Star Macalline Group Corporation Ltd.'s (SEHK:1528) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Did 1528 perform better than its track record and industry?
1528's trailing twelve-month earnings (from 31 December 2019) of CN¥4.5b has increased by 0.05% 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 4.0%, indicating the rate at which 1528 is growing has slowed down. To understand what's happening, let's look at what's occurring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Red Star Macalline Group has fallen short of achieving a 20% return on equity (ROE), recording 9.6% instead. However, its return on assets (ROA) of 4.8% exceeds the HK Real Estate industry of 2.9%, indicating Red Star Macalline Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Red Star Macalline Group’s debt level, has increased over the past 3 years from 5.8% to 6.4%.
What does this mean?
Though Red Star Macalline Group's past data is helpful, it is only one aspect of my investment thesis. While Red Star Macalline Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Red Star Macalline Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1528’s future growth? Take a look at our free research report of analyst consensus for 1528’s outlook.
- Financial Health: Are 1528’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 31 December 2019. This may not be consistent with full year annual report figures.
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.
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