After reading Usha Martin Education & Solutions Limited’s (NSEI:UMESLTD) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether UMESLTD has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Usha Martin Education & Solutions
Was UMESLTD’s recent earnings decline worse than the long-term trend and the industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 blend allows me to analyze various companies on a more comparable basis, using the latest information. For Usha Martin Education & Solutions, its most recent twelve-month earnings is -₹25.1M, which, against the previous year’s level, has become more negative. Given that these figures are fairly short-term, I have calculated an annualized five-year figure for Usha Martin Education & Solutions’s net income, which stands at -₹6.6M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
We can further analyze Usha Martin Education & Solutions’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the past couple of years has been negative at -34.02%. The key to profitability here is to make sure the company’s cost growth is well-managed. Looking at growth from a sector-level, the IN diversified consumer services industry has been growing, albeit, at a muted single-digit rate of 5.06% in the prior year, and a substantial 11.62% over the past couple of years. This means that any uplift the industry is enjoying, Usha Martin Education & Solutions has not been able to realize the gains unlike its industry peers.
What does this mean?
Usha Martin Education & Solutions’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Usha Martin Education & Solutions may be facing and whether management guidance has regularly been met in the past. You should continue to research Usha Martin Education & Solutions to get a more holistic view of the stock by looking at: