In This Article:
Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
Today I will examine Bajaj Auto Limited's (NSE:BAJAJ-AUTO) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of BAJAJ-AUTO's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
See our latest analysis for Bajaj Auto
Did BAJAJ-AUTO beat its long-term earnings growth trend and its industry?
BAJAJ-AUTO's trailing twelve-month earnings (from 31 December 2018) of ₹47b has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.7%, indicating the rate at which BAJAJ-AUTO is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely owing to an industry uplift, or if Bajaj Auto has seen some company-specific growth.
In terms of returns from investment, Bajaj Auto has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 18% exceeds the IN Auto industry of 14%, indicating Bajaj Auto has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Bajaj Auto’s debt level, has declined over the past 3 years from 40% to 30%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Bajaj Auto 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 Bajaj Auto to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for BAJAJ-AUTO’s future growth? Take a look at our free research report of analyst consensus for BAJAJ-AUTO’s outlook.
-
Financial Health: Are BAJAJ-AUTO’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.
-
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.