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When SJVN Limited (NSEI:SJVN) released its most recent earnings update (31 March 2017), 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 SJVN 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 SJVN has performed. Check out our latest analysis for SJVN
Were SJVN’s earnings stronger than its past performances and the industry?
I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine various companies on a similar basis, using new information. For SJVN, its latest earnings (trailing twelve month) is ₹15.44B, which, relative to last year’s figure, has risen by a relatively subdued 9.72%. Given that these values may be fairly nearsighted, I have created an annualized five-year value for SJVN’s earnings, which stands at ₹11.55B This shows that, generally, SJVN has been able to increasingly grow its net income over the past couple of years as well.
What’s enabled this growth? Let’s take a look at whether it is only because of industry tailwinds, or if SJVN has seen some company-specific growth. In the past couple of years, SJVN grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the IN electric utilities industry has been growing its average earnings by double-digit 15.43% in the past twelve months, and a less exciting 9.32% over the previous five years. This means any uplift the industry is benefiting from, SJVN has not been able to gain as much as its average peer.
What does this mean?
Though SJVN’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as SJVN gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research SJVN 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 SJVN’s future growth? Take a look at our free research report of analyst consensus for SJVN’s outlook.
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Financial Health: Is SJVN’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 31 March 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.