When Sintex Industries Limited (NSE:SINTEX) announced its most recent earnings (30 June 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Sintex Industries performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see SINTEX has performed.
See our latest analysis for Sintex Industries
Was SINTEX weak performance lately part of a long-term decline?
SINTEX’s trailing twelve-month earnings (from 30 June 2018) of ₹1.5b has declined by -15% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -12%, indicating the rate at which SINTEX is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Sintex Industries has fallen short of achieving a 20% return on equity (ROE), recording 3.3% instead. Furthermore, its return on assets (ROA) of 2.3% is below the IN Luxury industry of 5.9%, indicating Sintex Industries’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Sintex Industries’s debt level, has declined over the past 3 years from 8.9% to 2.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 98% to 125% over the past 5 years.
What does this mean?
Though Sintex Industries’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that experience an extended period of decline in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I recommend you continue to research Sintex Industries 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 SINTEX’s future growth? Take a look at our free research report of analyst consensus for SINTEX’s outlook.
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Financial Health: Are SINTEX’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.