In this commentary, I will examine Weibo Corporation's (NASDAQ:WB) latest earnings update (30 June 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the interactive media and services industry performed. As an investor, I find it beneficial to assess WB’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Did WB's Recent Performance Stack Up Against Its Past?
WB's trailing twelve-month earnings (from 30 June 2019) of US$585m has jumped 24% 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 66%, indicating the rate at which WB is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Weibo has invested its equity funds well leading to a 29% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Interactive Media and Services industry of 6.7%, indicating Weibo has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Weibo’s debt level, has increased over the past 3 years from 11% to 21%.
What does this mean?
Though Weibo's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Weibo gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Weibo to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WB’s future growth? Take a look at our free research report of analyst consensus for WB’s outlook.
- Financial Health: Are WB’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.
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