When Airo Lam Limited (NSEI:AIROLAM) announced its most recent earnings (31 March 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Airo Lam performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see AIROLAM has performed. View our latest analysis for Airo Lam
Did AIROLAM’s recent EPS Growth beat the long-term trend and the industry?
I prefer to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to assess various companies in a uniform manner using the most relevant data points. For Airo Lam, the latest twelve-month earnings is ₹18.9M, which, in comparison to last year’s level, has climbed up by 13.05%. Given that these values are somewhat short-term thinking, I’ve created an annualized five-year figure for AIROLAM’s earnings, which stands at ₹16.2M. This shows that, on average, Airo Lam has been able to steadily grow its net income over the last few years as well.
How has it been able to do this? Let’s see whether it is solely attributable to industry tailwinds, or if Airo Lam has seen some company-specific growth. In the last couple of years, Airo Lam increased its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the IN paper and forest products industry has been increasing average earnings growth of 58.05% in the prior year, and a robust 15.92% over the past couple of years. This means that any tailwind the industry is enjoying, Airo Lam has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Airo Lam gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Airo Lam to get a more holistic view of the stock by looking at:
1. Financial Health: Is AIROLAM’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.