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For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Sands China Ltd. (HKG:1928) useful as an attempt to give more color around how Sands China is currently performing.
Could 1928 beat the long-term trend and outperform its industry?
1928’s trailing twelve-month earnings (from 31 December 2018) of US$1.9b has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -9.8%, indicating the rate at which 1928 is growing has accelerated. How has it been able to do this? Let’s see if it is merely due to industry tailwinds, or if Sands China has seen some company-specific growth.
In terms of returns from investment, Sands China has invested its equity funds well leading to a 43% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 17% exceeds the HK Hospitality industry of 4.4%, indicating Sands China has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sands China’s debt level, has increased over the past 3 years from 16% to 23%.
What does this mean?
Though Sands China’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Sands China to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1928’s future growth? Take a look at our free research report of analyst consensus for 1928’s outlook.
- Financial Health: Are 1928’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.
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 firstname.lastname@example.org. 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.