Analyzing Sundaram Brake Linings Limited’s (NSE:SUNDRMBRAK) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess SUNDRMBRAK’s recent performance announced on 31 March 2018 and compare these figures to its long-term trend and industry movements. See our latest analysis for Sundaram Brake Linings

Did SUNDRMBRAK beat its long-term earnings growth trend and its industry?

SUNDRMBRAK recently turned a profit of ₹37.65m (most recent trailing twelve-months) compared to its average loss of -₹24.47m over the past five years.

Over the last few years, Sundaram Brake Linings increased bottom-line, while its top-line declined, by effectively managing its costs. This has led to to a margin expansion and profitability over time. Inspecting growth from a sector-level, the IN auto components industry has been growing its average earnings by double-digit 22.70% over the previous year, and 12.20% over the past five years. This shows that whatever tailwind the industry is enjoying, Sundaram Brake Linings is capable of amplifying this to its advantage.

In terms of returns from investment, Sundaram Brake Linings has not invested its equity funds well, leading to a 5.04% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.33% is below the IN Auto Components industry of 7.95%, indicating Sundaram Brake Linings’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Sundaram Brake Linings’s debt level, has increased over the past 3 years from -9.87% to 5.37%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Sundaram Brake Linings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Sundaram Brake Linings to get a more holistic view of the stock by looking at:

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

2. Financial Health: Is SUNDRMBRAK’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 pass 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.