Assessing VISA Steel Limited’s (NSEI:VISASTEEL) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess VISASTEEL’s latest performance announced on 31 March 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for VISA Steel
Did VISASTEEL beat its long-term earnings growth trend and its industry?
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze different companies on a similar basis, using the most relevant data points. For VISA Steel, its latest earnings is -₹1,194.5M, which, in comparison to last year’s level, has become less negative. Given that these values are somewhat myopic, I have created an annualized five-year figure for VISA Steel’s net income, which stands at -₹2,085.6M. This means that, although net income is negative, it has become less negative over the years.
Additionally, we can examine VISA Steel’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has risen by a mere 2.59%. Since top-line growth is also pretty flat, the key to profitability moving forward would be managing costs. Viewing 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 twelve months, and a more muted 3.25% over the previous five years. This means that, although VISA Steel is currently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
VISA Steel’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues VISA Steel may be facing and whether management guidance has consistently been met in the past. You should continue to research VISA Steel to get a more holistic view of the stock by looking at:
1. Financial Health: Is VISASTEEL’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.