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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Narayana Hrudayalaya Limited's (NSE:NH) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
View our latest analysis for Narayana Hrudayalaya
Could NH beat the long-term trend and outperform its industry?
NH's trailing twelve-month earnings (from 31 March 2019) of ₹592m has jumped 15% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which NH is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Narayana Hrudayalaya has fallen short of achieving a 20% return on equity (ROE), recording 5.5% instead. Furthermore, its return on assets (ROA) of 5.0% is below the IN Healthcare industry of 5.7%, indicating Narayana Hrudayalaya's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Narayana Hrudayalaya’s debt level, has declined over the past 3 years from 8.3% to 7.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 57% to 68% over the past 5 years.
What does this mean?
Though Narayana Hrudayalaya's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Narayana Hrudayalaya to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for NH’s future growth? Take a look at our free research report of analyst consensus for NH’s outlook.
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Financial Health: Are NH’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 March 2019. 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.