Today I will examine ABM International Limited’s (NSEI:ABMINTLTD) latest earnings update (31 March 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of ABMINTLTD’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for ABM International
How Well Did ABMINTLTD Perform?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess many different companies on a similar basis, using new information. “For ABM International, its “, latest twelve-month earnings is ₹6.6M, which compared to last year’s figure, has sunken by a substantial -79.14%. Given that these figures may be somewhat short-term thinking, I’ve determined an annualized five-year value for ABMINTLTD’s earnings, which stands at ₹7.6M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been falling over the longer term.
What could be happening here? Let’s examine what’s occurring with margins and whether the whole industry is feeling the heat. In the past couple of years, revenue growth has not been able to keep up with, earnings, which indicates that ABM International’s bottom line has been propelled by unsustainable cost-reductions. Inspecting growth from a sector-level, the IN trading companies and distributors industry has been growing, albeit, at a muted single-digit rate of 6.84% over the past year, and 8.11% over the past couple of years. This suggests that whatever tailwind the industry is enjoying, ABM International has not been able to reap as much as its industry peers.
What does this mean?
ABM International’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that face a prolonged period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry disruption and expansion. I recommend you continue to research ABM International to get a more holistic view of the stock by looking at:
1. Financial Health: Is ABMINTLTD’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.