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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Vardhman Textiles Limited (NSE:VTL) useful as an attempt to give more color around how Vardhman Textiles is currently performing.
See our latest analysis for Vardhman Textiles
How VTL fared against its long-term earnings performance and its industry
VTL’s trailing twelve-month earnings (from 31 December 2018) of ₹7.1b has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.0%, indicating the rate at which VTL is growing has accelerated. How has it been able to do this? Let’s see whether it is only attributable to an industry uplift, or if Vardhman Textiles has experienced some company-specific growth.
In terms of returns from investment, Vardhman Textiles has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 9.9% exceeds the IN Luxury industry of 5.9%, indicating Vardhman Textiles has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Vardhman Textiles’s debt level, has increased over the past 3 years from 14% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 99% to 25% over the past 5 years.
What does this mean?
Though Vardhman Textiles’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Vardhman Textiles 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 VTL’s future growth? Take a look at our free research report of analyst consensus for VTL’s outlook.
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Financial Health: Are VTL’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 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.