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 Adhunik Metaliks Limited’s (NSEI:ADHUNIK) 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. See our latest analysis for Adhunik Metaliks
Was ADHUNIK weak performance lately part of a long-term decline?
I like to use the ‘latest twelve-month’ data, 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 enables me to examine different stocks on a similar basis, using the latest information. For Adhunik Metaliks, its most recent trailing-twelve-month earnings is -₹14.80B, which compared to the previous year’s figure, has become more negative. Since these values are relatively short-term, I’ve computed an annualized five-year figure for ADHUNIK’s earnings, which stands at -₹1.06B. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.
We can further evaluate Adhunik Metaliks’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Adhunik Metaliks has seen an annual decline in revenue of -5.40%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the IN metals and mining industry has been growing its average earnings by double-digit 27.16% over the previous twelve months, and a more subdued 4.93% over the previous five years. This shows that whatever uplift the industry is profiting from, Adhunik Metaliks has not been able to reap as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Adhunik Metaliks may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Adhunik Metaliks to get a better picture of the stock by looking at:
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1. Financial Health: Is ADHUNIK’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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2. Valuation: What is ADHUNIK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ADHUNIK is currently mispriced by the market.
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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 2017. 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.