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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Grand Ming Group Holdings Limited (HKG:1271) useful as an attempt to give more color around how Grand Ming Group Holdings is currently performing.
How Did 1271’s Recent Performance Stack Up Against Its Past?
1271’s trailing twelve-month earnings (from 30 September 2018) of HK$152m has increased by 1.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -19%, indicating the rate at which 1271 is growing has accelerated. What’s enabled this growth? Let’s see whether it is merely a result of an industry uplift, or if Grand Ming Group Holdings has seen some company-specific growth.
In terms of returns from investment, Grand Ming Group Holdings has fallen short of achieving a 20% return on equity (ROE), recording 5.4% instead. Furthermore, its return on assets (ROA) of 2.5% is below the HK Construction industry of 5.6%, indicating Grand Ming Group Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Grand Ming Group Holdings’s debt level, has declined over the past 3 years from 4.9% to 3.6%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 60% to 139% over the past 5 years.
What does this mean?
Though Grand Ming Group Holdings’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. I suggest you continue to research Grand Ming Group Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1271’s future growth? Take a look at our free research report of analyst consensus for 1271’s outlook.
- Financial Health: Are 1271’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 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.