Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at China Telecom Corporation Limited’s (HKG:728) 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.
See our latest analysis for China Telecom
How Did 728’s Recent Performance Stack Up Against Its Past?
728’s trailing twelve-month earnings (from 30 June 2019) of CN¥22b has increased by 9.8% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.6%, indicating the rate at which 728 is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely attributable to an industry uplift, or if China Telecom has seen some company-specific growth.
In terms of returns from investment, China Telecom has fallen short of achieving a 20% return on equity (ROE), recording 6.2% instead. Furthermore, its return on assets (ROA) of 3.5% is below the HK Telecom industry of 6.4%, indicating China Telecom’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for China Telecom’s debt level, has declined over the past 3 years from 6.8% to 6.8%.
What does this mean?
China Telecom’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 China Telecom gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research China Telecom to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 728’s future growth? Take a look at our free research report of analyst consensus for 728’s outlook.
- Financial Health: Are 728’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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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.