After reading Shaanxi Northwest New Technology Industry Company Limited’s (SEHK:8258) most recent earnings announcement (31 December 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Shaanxi Northwest New Technology Industry’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Was 8258’s recent earnings decline indicative of a tough track record?
8258 recently turned a profit of CN¥10m (most recent trailing twelve-months) compared to its average loss of -CN¥2.8m over the past five years.
In terms of returns from investment, Shaanxi Northwest New Technology Industry has fallen short of achieving a 20% return on equity (ROE), recording 6.1% instead. Furthermore, its return on assets (ROA) of 3.3% is below the HK Chemicals industry of 6.6%, indicating Shaanxi Northwest New Technology Industry’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Shaanxi Northwest New Technology Industry’s debt level, has increased over the past 3 years from 2.1% to 7.2%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 3.4% to 1.8% over the past 5 years.
What does this mean?
Though Shaanxi Northwest New Technology Industry’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research Shaanxi Northwest New Technology Industry to get a better picture of the stock by looking at:
- Financial Health: Are 8258’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 31 December 2019. This may not be consistent with full year annual report figures.
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