Examining how Andhra Cements Limited (NSEI:ANDHRACEMT) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Andhra Cements is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its construction materials industry peers. Check out our latest analysis for Andhra Cements
Commentary On ANDHRACEMT’s Past Performance
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 enables me to analyze different companies on a similar basis, using the most relevant data points. For Andhra Cements, the most recent earnings -₹698.6M, which, against last year’s figure, has become less negative. Since these values are fairly short-term thinking, I have calculated an annualized five-year value for Andhra Cements’s net income, which stands at -₹543.8M. This suggests that, Andhra Cements has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further evaluate Andhra Cements’s loss by researching what has been happening in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over the past few years has risen by 31.67%, indicating that Andhra Cements is in a high-growth period with expenses shooting ahead of high top-line growth rates. Eyeballing growth from a sector-level, the IN construction materials industry has been growing its average earnings by double-digit 19.09% over the past twelve months, and a more muted 4.40% over the previous few years. This shows that, while Andhra Cements is presently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Andhra Cements’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Andhra Cements may be facing and whether management guidance has regularly been met in the past. You should continue to research Andhra Cements to get a better picture of the stock by looking at:
1. Financial Health: Is ANDHRACEMT’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.