China Maple Leaf Educational Systems Limited (HKG:1317): Has Recent Earnings Growth Beaten Long-Term Trend?

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After reading China Maple Leaf Educational Systems Limited’s (HKG:1317) latest earnings update (28 February 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 1317 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.

See our latest analysis for China Maple Leaf Educational Systems

Could 1317 beat the long-term trend and outperform its industry?

1317’s trailing twelve-month earnings (from 28 February 2019) of CN¥591m has jumped 27% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 39%, indicating the rate at which 1317 is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the whole industry is feeling the heat.

SEHK:1317 Income Statement, May 14th 2019
SEHK:1317 Income Statement, May 14th 2019

In terms of returns from investment, China Maple Leaf Educational Systems has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 11% exceeds the HK Consumer Services industry of 6.7%, indicating China Maple Leaf Educational Systems has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for China Maple Leaf Educational Systems’s debt level, has increased over the past 3 years from 12% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 136% to 8.3% over the past 5 years.

What does this mean?

China Maple Leaf Educational Systems’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as China Maple Leaf Educational Systems gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research China Maple Leaf Educational Systems to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for 1317’s future growth? Take a look at our free research report of analyst consensus for 1317’s outlook.
  2. Financial Health: Are 1317’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 28 February 2019. 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.