For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on International Housewares Retail Company Limited (SEHK:1373) useful as an attempt to give more color around how International Housewares Retail is currently performing.
Could 1373 beat the long-term trend and outperform its industry?
1373’s trailing twelve-month earnings (from 30 April 2019) of HK$119m has jumped 14% 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 1373 is growing has accelerated. What’s enabled this growth? Let’s see whether it is only due to industry tailwinds, or if International Housewares Retail has experienced some company-specific growth.
In terms of returns from investment, International Housewares Retail has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 11% exceeds the HK Specialty Retail industry of 6.2%, indicating International Housewares Retail has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for International Housewares Retail’s debt level, has increased over the past 3 years from 11% to 18%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 9.3% to 5.5% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While International Housewares Retail 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 International Housewares Retail to get a better picture of the stock by looking at:
- Financial Health: Are 1373’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.
- Valuation: What is 1373 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1373 is currently mispriced by the market.
- 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 April 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 email@example.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.