For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Surana Industries Limited (NSEI:SURANAIND) useful as an attempt to give more color around how Surana Industries is currently performing. See our latest analysis for Surana Industries
Were SURANAIND’s earnings stronger than its past performances and the industry?
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 stocks on a similar basis, using the most relevant data points. For Surana Industries, the latest twelve-month earnings -₹9,990.3M, which, relative to the previous year’s figure, has become less negative. Given that these figures may be fairly nearsighted, I have determined an annualized five-year figure for Surana Industries’s earnings, which stands at -₹3,440.8M. This means that, Surana Industries has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
We can further assess Surana Industries’s loss by researching what has been happening in the industry on top of within the company. Firstly, I want to quickly look into the line items. Revenue growth over last couple of years has been negative at -19.73%. The key to profitability here is to make sure the company’s cost growth is well-managed. Looking at growth from a sector-level, the IN metals and mining industry has been growing its average earnings by double-digit 27.08% in the past year, and a more muted 3.25% over the past couple of years. This shows that whatever uplift the industry is enjoying, Surana Industries has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Surana Industries’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Surana Industries may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Surana Industries to get a more holistic view of the stock by looking at:
1. Financial Health: Is SURANAIND’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.