Today I will examine China Mobile Limited’s (HKG:941) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of 941’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
How Well Did 941 Perform?
941’s trailing twelve-month earnings (from 31 December 2018) of CN¥118b has increased by 3.1% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.2%, indicating the rate at which 941 is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is only because of industry tailwinds, or if China Mobile has experienced some company-specific growth.
In terms of returns from investment, China Mobile has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 6.6% exceeds the HK Wireless Telecom industry of 6.1%, indicating China Mobile has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for China Mobile’s debt level, has declined over the past 3 years from 12% to 12%.
What does this mean?
China Mobile’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. 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 China Mobile to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 941’s future growth? Take a look at our free research report of analyst consensus for 941’s outlook.
- Financial Health: Are 941’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 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.