Today I will examine Sino Hotels (Holdings) Limited's (SEHK:1221) latest earnings update (30 June 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of 1221'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.
Have 1221's earnings improved against past performances and the industry?
1221's trailing twelve-month earnings (from 30 June 2019) of HK$196m has increased by 0.6% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -3.0%, indicating the rate at which 1221 is growing has accelerated. What's enabled this growth? Let's take a look at whether it is merely a result of an industry uplift, or if Sino Hotels (Holdings) has experienced some company-specific growth.
In terms of returns from investment, Sino Hotels (Holdings) has fallen short of achieving a 20% return on equity (ROE), recording 4.1% instead. Furthermore, its return on assets (ROA) of 3.6% is below the HK Hospitality industry of 4.7%, indicating Sino Hotels (Holdings)'s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Sino Hotels (Holdings)’s debt level, has increased over the past 3 years from 1.3% to 1.5%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. I suggest you continue to research Sino Hotels (Holdings) to get a more holistic view of the stock by looking at:
- Financial Health: Are 1221’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.
- Valuation: What is 1221 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1221 is currently mispriced by the market.
- 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.
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.
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