Assessing Art Group Holdings Limited’s (SEHK:565) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 565’s recent performance announced on 30 June 2019 and evaluate these figures to its long-term trend and industry movements.
Commentary On 565’s Past Performance
565’s trailing twelve-month earnings (from 30 June 2019) of HK$56m has declined by -17% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 23%, indicating the rate at which 565 is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Art Group Holdings has fallen short of achieving a 20% return on equity (ROE), recording 4.1% instead. Furthermore, its return on assets (ROA) of 2.7% is below the HK Real Estate industry of 2.9%, indicating Art Group Holdings’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Art Group Holdings’s debt level, has increased over the past 3 years from 2.6% to 4.5%.
What does this mean?
Though Art Group Holdings’s past data is helpful, it is only one aspect of my investment thesis. Generally companies that experience a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a indicator of a structural shift, which makes Art Group Holdings and its peers a riskier investment. I suggest you continue to research Art Group Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 565’s future growth? Take a look at our free research report of analyst consensus for 565’s outlook.
- Financial Health: Are 565’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 30 June 2019. This may not be consistent with full year annual report figures.
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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.