Does Ambika Cotton Mills Limited's (NSE:AMBIKCO) 3.5% Earnings Growth Reflect The Long-Term Trend?
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Assessing Ambika Cotton Mills Limited's (NSE:AMBIKCO) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess AMBIKCO's recent performance announced on 31 March 2019 and evaluate these figures to its longer term trend and industry movements.
Check out our latest analysis for Ambika Cotton Mills
How AMBIKCO fared against its long-term earnings performance and its industry
AMBIKCO's trailing twelve-month earnings (from 31 March 2019) of ₹632m has increased by 3.5% 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 6.7%, indicating the rate at which AMBIKCO is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Ambika Cotton Mills has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 12% exceeds the IN Luxury industry of 6.3%, indicating Ambika Cotton Mills has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Ambika Cotton Mills’s debt level, has increased over the past 3 years from 17% to 19%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 39% to 19% over the past 5 years.
What does this mean?
Ambika Cotton Mills's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Ambika Cotton Mills has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Ambika Cotton Mills to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AMBIKCO’s future growth? Take a look at our free research report of analyst consensus for AMBIKCO’s outlook.
Financial Health: Are AMBIKCO’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.
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 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.