In This Article:
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Ambuja Cements Limited's (NSE:AMBUJACEM) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
See our latest analysis for Ambuja Cements
Could AMBUJACEM beat the long-term trend and outperform its industry?
AMBUJACEM's trailing twelve-month earnings (from 31 December 2018) of ₹22b has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.2%, indicating the rate at which AMBUJACEM is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely because of an industry uplift, or if Ambuja Cements has seen some company-specific growth.
In terms of returns from investment, Ambuja Cements has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 5.5% is below the IN Basic Materials industry of 5.9%, indicating Ambuja Cements's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Ambuja Cements’s debt level, has increased over the past 3 years from 8.5% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 0.5% to 0.1% over the past 5 years.
What does this mean?
Though Ambuja Cements's past data is helpful, it is only one aspect of my investment thesis. While Ambuja Cements has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Ambuja Cements to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for AMBUJACEM’s future growth? Take a look at our free research report of analyst consensus for AMBUJACEM’s outlook.
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Financial Health: Are AMBUJACEM’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.
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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 trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.