Assessing Build King Holdings Limited’s (HKG:240) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 240’s recent performance announced on 30 June 2019 and evaluate these figures to its longer term trend and industry movements.
How Did 240’s Recent Performance Stack Up Against Its Past?
240’s trailing twelve-month earnings (from 30 June 2019) of HK$345m has increased by 3.1% 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 42%, indicating the rate at which 240 is growing has slowed down. To understand what’s happening, let’s look at what’s going on with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Build King Holdings has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.1% exceeds the HK Construction industry of 5.7%, indicating Build King Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Build King Holdings’s debt level, has increased over the past 3 years from 21% to 37%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 38% to 29% over the past 5 years.
What does this mean?
Build King 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 Build King Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Build King Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 240’s future growth? Take a look at our free research report of analyst consensus for 240’s outlook.
- Financial Health: Are 240’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 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. Thank you for reading.