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After looking at Future Lifestyle Fashions Limited's (NSE:FLFL) latest earnings announcement (31 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Check out our latest analysis for Future Lifestyle Fashions
Could FLFL beat the long-term trend and outperform its industry?
FLFL's trailing twelve-month earnings (from 31 March 2019) of ₹1.9b has jumped 50% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 73%, indicating the rate at which FLFL is growing has slowed down. What could be happening here? Well, let's examine what's occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Future Lifestyle Fashions has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 6.0% is below the IN Specialty Retail industry of 6.5%, indicating Future Lifestyle Fashions's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Future Lifestyle Fashions’s debt level, has increased over the past 3 years from 7.6% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 105% to 44% over the past 5 years.
What does this mean?
Though Future Lifestyle Fashions's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Future Lifestyle Fashions 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 FLFL’s future growth? Take a look at our free research report of analyst consensus for FLFL’s outlook.
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Financial Health: Are FLFL’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.