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When Wipro Limited’s (NSE:WIPRO) announced its latest earnings (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Wipro’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not WIPRO actually performed well. Below is a quick commentary on how I see WIPRO has performed.
Check out our latest analysis for Wipro
Did WIPRO’s recent performance beat its trend and industry?
WIPRO’s trailing twelve-month earnings (from 31 December 2018) of ₹83b has declined by -1.7% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 0.1%, indicating the rate at which WIPRO is growing has slowed down. What could be happening here? Well, let’s look at what’s occurring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Wipro has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 8.6% exceeds the IN IT industry of 7.1%, indicating Wipro has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Wipro’s debt level, has declined over the past 3 years from 19% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 14% to 19% over the past 5 years.
What does this mean?
Wipro’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Wipro 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 WIPRO’s future growth? Take a look at our free research report of analyst consensus for WIPRO’s outlook.
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Financial Health: Are WIPRO’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.