Analyzing Lonking Holdings Limited's (SEHK:3339) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess 3339's recent performance announced on 30 June 2019 and compare these figures to its long-term trend and industry movements.
Commentary On 3339's Past Performance
3339's trailing twelve-month earnings (from 30 June 2019) of CN¥1.3b has increased by 6.1% 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 36%, indicating the rate at which 3339 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Lonking Holdings has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 8.5% exceeds the HK Machinery industry of 5.1%, indicating Lonking Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Lonking Holdings’s debt level, has increased over the past 3 years from 3.1% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 64% to 15% over the past 5 years.
What does this mean?
Lonking Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Lonking Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Lonking Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 3339’s future growth? Take a look at our free research report of analyst consensus for 3339’s outlook.
- Financial Health: Are 3339’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.
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 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. Thank you for reading.