When Cochin Shipyard Limited (NSE:COCHINSHIP) released its most recent earnings update (31 March 2018), 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 Cochin Shipyard 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 COCHINSHIP has performed.

See our latest analysis for Cochin Shipyard

Were COCHINSHIP’s earnings stronger than its past performances and the industry?

COCHINSHIP’s trailing twelve-month earnings (from 31 March 2018) of ₹4.0b has jumped 27% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which COCHINSHIP is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is only attributable to industry tailwinds, or if Cochin Shipyard has experienced some company-specific growth.

In terms of returns from investment, Cochin Shipyard has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 4.6% is below the IN Machinery industry of 7.2%, indicating Cochin Shipyard’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Cochin Shipyard’s debt level, has increased over the past 3 years from 6.7% to 18%.

What does this mean?

Cochin Shipyard’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Cochin Shipyard has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Cochin Shipyard to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for COCHINSHIP’s future growth? Take a look at our free research report of analyst consensus for COCHINSHIP’s outlook.

2. Financial Health: Are COCHINSHIP’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.

3. 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 March 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.