Did China Electronics Optics Valley Union Holding Company Limited's (HKG:798) Recent Earnings Growth Beat The Trend?

Simply Wall St

When China Electronics Optics Valley Union Holding Company Limited (SEHK:798) released its most recent earnings update (31 December 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well China Electronics Optics Valley Union Holding has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see 798 has performed.

Check out our latest analysis for China Electronics Optics Valley Union Holding

Did 798's recent earnings growth beat the long-term trend and the industry?

798's trailing twelve-month earnings (from 31 December 2019) of CN¥569m has increased by 5.1% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.9%, indicating the rate at which 798 is growing has accelerated. What's the driver of this growth? Let's take a look at if it is merely because of industry tailwinds, or if China Electronics Optics Valley Union Holding has seen some company-specific growth.

SEHK:798 Income Statement April 5th 2020

In terms of returns from investment, China Electronics Optics Valley Union Holding has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. However, its return on assets (ROA) of 4.1% exceeds the HK Real Estate industry of 2.9%, indicating China Electronics Optics Valley Union Holding has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for China Electronics Optics Valley Union Holding’s debt level, has declined over the past 3 years from 7.0% to 6.7%.

What does this mean?

Though China Electronics Optics Valley Union Holding'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 recommend you continue to research China Electronics Optics Valley Union Holding to get a more holistic view of the stock by looking at:

  1. Financial Health: Are 798’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 798 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 798 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 2019. This may not be consistent with full year annual report figures.

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.

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