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After looking at Gandhi Special Tubes Limited’s (NSEI:GANDHITUBE) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Gandhi Special Tubes
How GANDHITUBE fared against its long-term earnings performance and its industry
I like 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 allows me to assess different companies on a similar basis, using the most relevant data points. For Gandhi Special Tubes, its latest earnings (trailing twelve month) is ₹326.14M, which, against the prior year’s level, has risen by 12.74%. Since these figures are fairly nearsighted, I’ve created an annualized five-year value for Gandhi Special Tubes’s net income, which stands at ₹232.01M This means on average, Gandhi Special Tubes has been able to increasingly grow its profits over the last few years as well.
How has it been able to do this? Let’s see if it is merely because of an industry uplift, or if Gandhi Special Tubes has experienced some company-specific growth. In the last couple of years, though bottom-line growth has seen a decline, top-line growth has fallen by a lot more, bringing about a margin expansion and Gandhi Special Tubes still maintaining profitability. Inspecting growth from a sector-level, the IN metals and mining industry has been growing its average earnings by double-digit 33.82% over the previous twelve months, and a more muted 9.75% over the past half a decade. This means that any tailwind the industry is deriving benefit from, Gandhi Special Tubes has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Gandhi Special Tubes has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Gandhi Special Tubes 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 GANDHITUBE’s future growth? Take a look at our free research report of analyst consensus for GANDHITUBE’s outlook.
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Financial Health: Is GANDHITUBE’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.