When TVS Motor Company Limited (NSEI:TVSMOTOR) 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. Understanding how TVS Motor 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 TVSMOTOR has performed. View our latest analysis for TVS Motor
How TVSMOTOR fared against its long-term earnings performance and its industry
For the most up-to-date info, I 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 technique allows me to analyze different companies on a more comparable basis, using the most relevant data points. For TVS Motor, the latest twelve-month earnings is ₹5,112.4M, which, relative to the previous year’s level, has increased by 19.13%. Given that these figures may be somewhat short-term, I’ve determined an annualized five-year figure for TVSMOTOR’s earnings, which stands at ₹2,732.5M. This shows that, on average, TVS Motor has been able to steadily raise its net income over the past few years as well.
What’s the driver of this growth? Let’s see whether it is only a result of an industry uplift, or if TVS Motor has seen some company-specific growth. In the past couple of years, TVS Motor increased 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 auto industry has been relatively flat in terms of earnings growth over the previous few years. This means that any near-term headwind the industry is experiencing, TVS Motor is relatively better-cushioned than its peers.
What does this mean?
Though TVS Motor’s past data is helpful, it is only one aspect of my investment thesis. While TVS Motor has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research TVS Motor to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for TVSMOTOR’s future growth? Take a look at our free research report of analyst consensus for TVSMOTOR’s outlook.
2. Financial Health: Is TVSMOTOR’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.