Today I will take a look at MMTC Limited’s (NSEI:MMTC) most recent earnings update (31 March 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the trading companies and distributors industry performed. As an investor, I find it beneficial to assess MMTC’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. See our latest analysis for MMTC
Did MMTC’s recent EPS Growth beat the long-term trend and the industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to assess different companies on a more comparable basis, using the most relevant data points. MMTC’s latest twelve-month earnings -₹297.6M, which, against the prior year’s level, has become less negative. Since these values may be fairly short-term thinking, I’ve determined an annualized five-year figure for MMTC’s earnings, which stands at -₹306.2M. This suggests that, even though net income is negative, it has become less negative over the years.
Additionally, we can examine MMTC’s loss by looking at what’s going on in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over last few years has been negative at -29.58%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at growth from a sector-level, the IN trading companies and distributors industry has been growing, albeit, at a subdued single-digit rate of 6.84% over the past twelve months, and 8.11% over the past couple of years. This suggests that, despite the fact that MMTC is currently running a loss, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though MMTC’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues MMTC may be facing and whether management guidance has consistently been met in the past. You should continue to research MMTC to get a more holistic view of the stock by looking at:
1. Financial Health: Is MMTC’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.