Was G.A. Holdings Limited's (HKG:8126) Earnings Growth Better Than The Industry's?
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess G.A. Holdings Limited's (SEHK:8126) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
See our latest analysis for G.A. Holdings
How Well Did 8126 Perform?
8126's trailing twelve-month earnings (from 31 December 2019) of HK$27m has jumped 22% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -28%, indicating the rate at which 8126 is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is only owing to industry tailwinds, or if G.A. Holdings has experienced some company-specific growth.
In terms of returns from investment, G.A. Holdings has fallen short of achieving a 20% return on equity (ROE), recording 4.3% instead. Furthermore, its return on assets (ROA) of 3.9% is below the HK Retail Distributors industry of 6.0%, indicating G.A. Holdings's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for G.A. Holdings’s debt level, has declined over the past 3 years from 13% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 75% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be variables that are impacting the entire industry thus the high industry growth rate over the same time period. I recommend you continue to research G.A. Holdings to get a better picture of the stock by looking at:
Financial Health: Are 8126’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.
Valuation: What is 8126 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 8126 is currently mispriced by the market.
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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