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In this commentary, I will examine Eimco Elecon (India) Limited's (NSE:EIMCOELECO) latest earnings update (31 March 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the machinery industry performed. As an investor, I find it beneficial to assess EIMCOELECO’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
View our latest analysis for Eimco Elecon (India)
How EIMCOELECO fared against its long-term earnings performance and its industry
EIMCOELECO's trailing twelve-month earnings (from 31 March 2019) of ₹232m has jumped 42% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.0%, indicating the rate at which EIMCOELECO is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is solely because of an industry uplift, or if Eimco Elecon (India) has experienced some company-specific growth.
In terms of returns from investment, Eimco Elecon (India) has fallen short of achieving a 20% return on equity (ROE), recording 7.4% instead. Furthermore, its return on assets (ROA) of 6.7% is below the IN Machinery industry of 7.6%, indicating Eimco Elecon (India)'s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Eimco Elecon (India)’s debt level, has increased over the past 3 years from 6.2% to 6.2%.
What does this mean?
Eimco Elecon (India)'s track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Eimco Elecon (India) 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 EIMCOELECO’s future growth? Take a look at our free research report of analyst consensus for EIMCOELECO’s outlook.
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Financial Health: Are EIMCOELECO’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.