After reading Repro India Limited’s (NSEI:REPRO) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether REPRO has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for Repro India
How Did REPRO’s Recent Performance Stack Up Against Its Past?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to analyze different companies on a similar basis, using new information. For Repro India, its most recent earnings is -₹39.1M, which, against the previous year’s figure, has become less negative. Since these figures are relatively short-term, I’ve computed an annualized five-year figure for REPRO’s net income, which stands at ₹114.1M.
We can further examine Repro India’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past few years has grown by a mere 2.86%. Given that top-line growth is also pretty stale the key to profitability moving forward would be controlling costs. Inspecting growth from a sector-level, the IN commercial services industry has been enduring some headwinds over the prior twelve months, leading to an average earnings drop of -29.60%. This is a major change, given that the industry has been delivering a positive rate of 9.30%, on average, over the past couple of years. This suggests that despite the fact that Repro India is currently running a loss, whatever recent headwind the industry is facing, Repro India is relatively better-cushioned than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Repro India may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Repro India to get a better picture of the stock by looking at:
1. Financial Health: Is REPRO’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.