Did Zhejiang Tengy Environmental Technology Co., Ltd's (HKG:1527) Recent Earnings Growth Beat The Trend?

After reading Zhejiang Tengy Environmental Technology Co., Ltd's (SEHK:1527) latest earnings update (31 December 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether 1527 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.

View our latest analysis for Zhejiang Tengy Environmental Technology

How 1527 fared against its long-term earnings performance and its industry

1527's trailing twelve-month earnings (from 31 December 2019) of CN¥34m 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 -21%, indicating the rate at which 1527 is growing has accelerated. How has it been able to do this? Let's take a look at if it is solely a result of industry tailwinds, or if Zhejiang Tengy Environmental Technology has experienced some company-specific growth.

In terms of returns from investment, Zhejiang Tengy Environmental Technology has fallen short of achieving a 20% return on equity (ROE), recording 4.5% instead. Furthermore, its return on assets (ROA) of 2.5% is below the HK Machinery industry of 4.9%, indicating Zhejiang Tengy Environmental Technology's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Zhejiang Tengy Environmental Technology’s debt level, has declined over the past 3 years from 22% to 5.4%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. I suggest you continue to research Zhejiang Tengy Environmental Technology to get a more holistic view of the stock by looking at:

1. Financial Health: Are 1527’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.
2. 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.

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.

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