For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Unity Infraprojects Limited’s (NSEI:UNITY) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Unity Infraprojects
Was UNITY’s recent earnings decline worse than the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I 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 blend enables me to assess different stocks on a more comparable basis, using the latest information. For Unity Infraprojects, its latest twelve-month earnings is -₹11,480.2M, which compared to the prior year’s level, has become more negative. Given that these figures may be somewhat short-term, I’ve estimated an annualized five-year value for UNITY’s earnings, which stands at -₹2,612.3M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
Additionally, we can analyze Unity Infraprojects’s loss by researching what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past few years has been negative at -22.90%. 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 construction and engineering industry has been growing its average earnings by double-digit 13.18% in the previous twelve months, and a more subdued 2.95% over the previous few years. This suggests that any uplift the industry is profiting from, Unity Infraprojects has not been able to realize the gains unlike its industry peers.
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 predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Unity Infraprojects may be facing and whether management guidance has consistently been met in the past. You should continue to research Unity Infraprojects to get a better picture of the stock by looking at:
1. Financial Health: Is UNITY’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.