Yahoo Finance Should Hainan Meilan International Airport Company Limited's (HKG:357) Recent Earnings Decline Worry You?
When Hainan Meilan International Airport Company Limited (SEHK:357) 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 Hainan Meilan International Airport 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 357 has performed.
See our latest analysis for Hainan Meilan International Airport
How Well Did 357 Perform?
357's trailing twelve-month earnings (from 31 December 2019) of CN¥575m has declined by -7.5% 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 9.5%, indicating the rate at which 357 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Hainan Meilan International Airport has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 5.0% exceeds the HK Infrastructure industry of 4.5%, indicating Hainan Meilan International Airport has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Hainan Meilan International Airport’s debt level, has increased over the past 3 years from 10% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 85% to 56% over the past 5 years.
What does this mean?
Though Hainan Meilan International Airport's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I suggest you continue to research Hainan Meilan International Airport to get a better picture of the stock by looking at:
Financial Health: Are 357’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.
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