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After looking at Shilpa Medicare Limited’s (NSEI:SHILPAMED) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. 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 an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for Shilpa Medicare
How Well Did SHILPAMED Perform?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess different companies in a uniform manner using the most relevant data points. For Shilpa Medicare, its most recent trailing-twelve-month earnings is ₹1.13B, which, in comparison to last year’s level, has grown by a relatively subdued 8.15%. Given that these figures are somewhat short-term, I have estimated an annualized five-year figure for Shilpa Medicare’s net income, which stands at ₹754.16M This shows that, generally, Shilpa Medicare has been able to increasingly improve its earnings over the last few years as well.
What’s enabled this growth? Let’s see whether it is merely attributable to an industry uplift, or if Shilpa Medicare has experienced some company-specific growth. Over the past couple of years, Shilpa Medicare expanded its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Looking at growth from a sector-level, the IN pharmaceuticals industry has been growing, albeit, at a unexciting single-digit rate of 6.38% over the past twelve months, and a substantial 14.03% over the previous five years. This means any uplift the industry is profiting from, Shilpa Medicare is capable of leveraging this to its advantage.
What does this mean?
Shilpa Medicare’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Shilpa Medicare gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Shilpa Medicare to get a more holistic view of the stock by looking at: