Measuring Pentamaster International Limited's (SEHK:1665) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 1665's recent performance announced on 31 December 2019 and compare these figures to its historical trend and industry movements.
Did 1665 beat its long-term earnings growth trend and its industry?
1665's trailing twelve-month earnings (from 31 December 2019) of RM131m has jumped 31% 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 43%, indicating the rate at which 1665 is growing has slowed down. To understand what's happening, let's look at what's occurring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Pentamaster International has invested its equity funds well leading to a 30% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the HK Semiconductor industry of 4.5%, indicating Pentamaster International has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Pentamaster International’s debt level, has declined over the past 3 years from 33% to 28%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Pentamaster International has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Pentamaster International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1665’s future growth? Take a look at our free research report of analyst consensus for 1665’s outlook.
- Financial Health: Are 1665’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 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 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.
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