When Clifford Modern Living Holdings Limited (HKG:3686) released its most recent earnings update (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Clifford Modern Living Holdings has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see 3686 has performed.
Were 3686’s earnings stronger than its past performances and the industry?
3686’s trailing twelve-month earnings (from 31 December 2018) of CN¥72m has jumped 29% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 20%, indicating the rate at which 3686 is growing has accelerated. What’s the driver of this growth? Let’s see whether it is merely a result of industry tailwinds, or if Clifford Modern Living Holdings has seen some company-specific growth.
In terms of returns from investment, Clifford Modern Living Holdings has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the HK Industrials industry of 2.7%, indicating Clifford Modern Living Holdings has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Clifford Modern Living Holdings’s debt level, has declined over the past 3 years from 55% to 32%.
What does this mean?
Though Clifford Modern Living Holdings’s past data is helpful, it is only one aspect of my investment thesis. While Clifford Modern Living Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Clifford Modern Living Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 3686’s future growth? Take a look at our free research report of analyst consensus for 3686’s outlook.
- Financial Health: Are 3686’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 2018. This may not be consistent with full year annual report figures.
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