When Metkore Alloys & Industries Limited (NSEI:METKORE) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Metkore Alloys & Industries has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see METKORE has performed. View our latest analysis for Metkore Alloys & Industries
Did METKORE’s recent earnings growth beat the long-term trend and the industry?
I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to examine different stocks on a more comparable basis, using the latest information. For Metkore Alloys & Industries, its most recent twelve-month earnings is -₹168.9M, which, relative to the previous year’s level, has become less negative. Since these values may be somewhat short-term, I’ve estimated an annualized five-year value for Metkore Alloys & Industries’s net income, which stands at ₹32.5M.
We can further assess Metkore Alloys & Industries’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the last few years has been negative at -18.08%. 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 metals and mining industry has been growing its average earnings by double-digit 27.08% in the past twelve months, and a less exciting 3.25% over the past five years. This means that, while Metkore Alloys & Industries is presently loss-making, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Metkore Alloys & Industries may be facing and whether management guidance has steadily been met in the past. You should continue to research Metkore Alloys & Industries to get a better picture of the stock by looking at: