Where China Machinery Engineering Corporation (HKG:1829) Stands In Terms Of Earnings Growth Against Its Industry

Assessing China Machinery Engineering Corporation's (HKG:1829) 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 1829's recent performance announced on 31 December 2018 and evaluate these figures to its longer term trend and industry movements.

Check out our latest analysis for China Machinery Engineering

Were 1829's earnings stronger than its past performances and the industry?

1829's trailing twelve-month earnings (from 31 December 2018) of CN¥2.1b has jumped 25% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.1%, indicating the rate at which 1829 is growing has accelerated. What's enabled this growth? Well, let’s take a look at whether it is solely a result of an industry uplift, or if China Machinery Engineering has seen some company-specific growth.

In terms of returns from investment, China Machinery Engineering has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 3.0% is below the HK Construction industry of 5.7%, indicating China Machinery Engineering's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for China Machinery Engineering’s debt level, has declined over the past 3 years from 12% to 8.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 2.7% to 6.0% over the past 5 years.

What does this mean?

China Machinery Engineering's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While China Machinery Engineering has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research China Machinery Engineering to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 1829’s future growth? Take a look at our free research report of analyst consensus for 1829’s outlook.
2. Financial Health: Are 1829’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.
3. 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 2018. 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 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.