When Uttam Galva Steels Limited (NSEI:UTTAMSTL) announced its most recent earnings (31 March 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 Uttam Galva Steels 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 UTTAMSTL has performed. View our latest analysis for Uttam Galva Steels
Were UTTAMSTL’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, 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 examine many different companies on a more comparable basis, using the most relevant data points. Uttam Galva Steels’s most recent bottom-line -₹4,374.8M, which, in comparison to last year’s level, has become less negative. Given that these figures are relatively short-term thinking, I have estimated an annualized five-year value for Uttam Galva Steels’s net income, which stands at -₹1,764.2M. This shows that, Uttam Galva Steels has historically performed better than recently, though it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate Uttam Galva Steels’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 couple of years has increased by a mere 4.59%. Given that top-line growth is also pretty stale the key to profitability moving forward would be controlling cost growth rates. Looking at growth from a sector-level, the IN metals and mining industry has been growing its average earnings by double-digit 27.08% over the past year, and a more muted 3.25% over the previous five years. This shows that, while Uttam Galva Steels is presently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Uttam Galva Steels’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to assess company-specific issues Uttam Galva Steels may be facing and whether management guidance has dependably been met in the past. You should continue to research Uttam Galva Steels to get a better picture of the stock by looking at: