Examining The Karnataka Bank Limited’s (NSEI:KTKBANK) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess KTKBANK’s latest performance announced on 30 September 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Karnataka Bank
Did KTKBANK perform worse than its track record and industry?
I use the ‘latest twelve-month’ data, 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 technique allows me to assess various companies in a uniform manner using the most relevant data points. “For Karnataka Bank, its “, most recent earnings is ₹4,341.3M, which, in comparison to the previous year’s level, has dropped by -3.33%. Given that these figures may be fairly myopic, I’ve created an annualized five-year figure for Karnataka Bank’s net income, which stands at ₹3,532.3M. This means while earnings declined from last year, over the past couple of years, Karnataka Bank’s profits have been increasing on average.
What’s enabled this growth? Let’s see whether it is solely due to industry tailwinds, or if Karnataka Bank has seen some company-specific growth. The climb in earnings seems to be propelled by a strong top-line increase overtaking its growth rate of expenses. Though this resulted in a margin contraction, it has made Karnataka Bank more profitable. Eyeballing growth from a sector-level, the IN banks industry has been growing, albeit, at a muted single-digit rate of 7.74% in the previous year, and a flatter -0.47% over the past five. This shows that, in the recent industry expansion, Karnataka Bank has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Karnataka Bank’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research Karnataka Bank to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for KTKBANK’s future growth? Take a look at our free research report of analyst consensus for KTKBANK’s outlook.
2. Financial Health: Is KTKBANK’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.