After looking at Parabolic Drugs Limited’s (NSEI:PARABDRUGS) latest earnings announcement (31 March 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. Check out our latest analysis for Parabolic Drugs
Did PARABDRUGS beat its long-term earnings growth trend and its industry?
For the most up-to-date info, 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 allows me to analyze different companies in a uniform manner using the latest information. Parabolic Drugs’s latest earnings -₹1,080.9M, which compared to the previous year’s figure, has become less negative. Given that these figures may be relatively short-term thinking, I’ve determined an annualized five-year figure for Parabolic Drugs’s net income, which stands at -₹1,641.8M. This suggests that, even though net income is negative, it has become less negative over the years.
We can further examine Parabolic Drugs’s loss by looking at what’s going on in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over the past few years has been negative at -30.83%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the IN pharmaceuticals industry has been growing its average earnings by double-digit 11.44% in the previous twelve months, and 14.21% over the past five. This shows that, while Parabolic Drugs is currently running a loss, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Parabolic Drugs’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Parabolic Drugs may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Parabolic Drugs to get a better picture of the stock by looking at: