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Investors with a long-term horizong may find it valuable to assess China Shun Ke Long Holdings Limited's (HKG:974) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how China Shun Ke Long Holdings is currently performing.
View our latest analysis for China Shun Ke Long Holdings
Was 974's recent earnings decline worse than the long-term trend and the industry?
974's trailing twelve-month earnings (from 31 December 2018) of CN¥11m has declined by -3.7% 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 974 is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, China Shun Ke Long Holdings has fallen short of achieving a 20% return on equity (ROE), recording 4.1% instead. Furthermore, its return on assets (ROA) of 2.5% is below the HK Consumer Retailing industry of 4.6%, indicating China Shun Ke Long Holdings's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for China Shun Ke Long Holdings’s debt level, has declined over the past 3 years from 18% to 6.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 37% to 39% over the past 5 years.
What does this mean?
China Shun Ke Long Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Typically companies that endure an extended period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I suggest you continue to research China Shun Ke Long Holdings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 974’s future growth? Take a look at our free research report of analyst consensus for 974’s outlook.
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Financial Health: Are 974’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.
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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.