After reading Xpro India Limited’s (NSEI:XPROINDIA) most recent earnings announcement (31 March 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Xpro India
Commentary On XPROINDIA’s Past Performance
I like 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 method allows me to analyze different companies on a similar basis, using the latest information. For Xpro India, its latest twelve-month earnings is -₹120.9M, which compared to the prior year’s figure, has become less negative. Given that these figures may be fairly short-term thinking, I’ve created an annualized five-year figure for XPROINDIA’s net income, which stands at -₹84.2M. This suggests that, Xpro India has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards to right direction again.
We can further evaluate Xpro India’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past few years has been relatively subdued, remaining flat on average at 1.55%. Given that top-line growth is also pretty flat, the key to profitability in the future would be controlling costs. Inspecting growth from a sector-level, the IN chemicals industry has been growing its average earnings by double-digit 12.33% in the prior twelve months, and 11.37% over the past five. This suggests that, while Xpro India is currently running a loss, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Xpro India may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Xpro India to get a more holistic view of the stock by looking at: