Plover Bay Technologies Limited’s (HKG:1523) Earnings Grew 21%, Did It Beat Long-Term Trend?

Assessing Plover Bay Technologies Limited’s (HKG:1523) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Plover Bay Technologies is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its communications industry peers.

See our latest analysis for Plover Bay Technologies

Commentary On 1523’s Past Performance

1523’s trailing twelve-month earnings (from 31 December 2018) of US$11m has jumped 21% 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 27%, indicating the rate at which 1523 is growing has slowed down. To understand what’s happening, let’s examine what’s going on with margins and whether the whole industry is facing the same headwind.

SEHK:1523 Income Statement, March 20th 2019
SEHK:1523 Income Statement, March 20th 2019

In terms of returns from investment, Plover Bay Technologies has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 23% exceeds the HK Communications industry of 8.2%, indicating Plover Bay Technologies has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Plover Bay Technologies’s debt level, has declined over the past 3 years from 64% to 34%.

What does this mean?

Though Plover Bay Technologies’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Plover Bay Technologies gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Plover Bay Technologies to get a better picture of the stock by looking at:

  1. Financial Health: Are 1523’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.
  2. Valuation: What is 1523 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 1523 is currently mispriced by the market.
  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 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 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.