In This Article:
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on CARE Ratings Limited (NSE:CARERATING) useful as an attempt to give more color around how CARE Ratings is currently performing.
Check out our latest analysis for CARE Ratings
Was CARERATING’s recent earnings decline worse than the long-term trend and the industry?
CARERATING’s trailing twelve-month earnings (from 31 December 2018) of ₹1.4b has declined by -9.9% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 3.7%, indicating the rate at which CARERATING is growing has slowed down. What could be happening here? Let’s examine what’s transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, CARE Ratings has invested its equity funds well leading to a 26% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 21% exceeds the IN Capital Markets industry of 4.2%, indicating CARE Ratings has used its assets more efficiently. However, its return on capital (ROC), which also accounts for CARE Ratings’s debt level, has declined over the past 3 years from 42% to 33%.
What does this mean?
Though CARE Ratings’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. You should continue to research CARE Ratings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for CARERATING’s future growth? Take a look at our free research report of analyst consensus for CARERATING’s outlook.
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Financial Health: Are CARERATING’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.