Examining UPL Limited’s (NSEI:UPL) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess UPL’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for UPL
How UPL fared against its long-term earnings performance and its industry
I prefer to use data from the most recent 12 months, 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 method enables me to examine different companies on a similar basis, using the most relevant data points. For UPL, its most recent bottom-line (trailing twelve month) is ₹20.27B, which, against last year’s figure, has increased by 31.01%. Since these figures are relatively myopic, I have estimated an annualized five-year figure for UPL’s earnings, which stands at ₹10.71B This suggests that, generally, UPL has been able to increasingly raise its earnings over the last couple of years as well.
What’s the driver of this growth? Well, let’s take a look at if it is merely attributable to industry tailwinds, or if UPL has experienced some company-specific growth. In the past couple of years, UPL increased its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the IN chemicals industry has been growing its average earnings by double-digit 22.68% over the past year, and 11.06% over the previous five years. This means any uplift the industry is benefiting from, UPL is able to amplify this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as UPL gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research UPL 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 UPL’s future growth? Take a look at our free research report of analyst consensus for UPL’s outlook.
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Financial Health: Is UPL’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 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.