In This Article:
Understanding Yip's Chemical Holdings Limited's (SEHK:408) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Yip's Chemical Holdings is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Check out our latest analysis for Yip's Chemical Holdings
Was 408's recent earnings decline indicative of a tough track record?
408's trailing twelve-month earnings (from 30 June 2019) of HK$186m has declined by -8.9% 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 1.7%, indicating the rate at which 408 is growing has slowed down. Why is this? Well, let's look at what's going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Yip's Chemical Holdings has fallen short of achieving a 20% return on equity (ROE), recording 7.0% instead. Furthermore, its return on assets (ROA) of 3.2% is below the HK Chemicals industry of 7.5%, indicating Yip's Chemical Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Yip's Chemical Holdings’s debt level, has increased over the past 3 years from 6.2% to 7.7%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 87% to 70% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Yip's Chemical Holdings to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 408’s future growth? Take a look at our free research report of analyst consensus for 408’s outlook.
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Financial Health: Are 408’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 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 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.