In This Article:
After looking at Bharat Forge Limited’s (NSE:BHARATFORG) latest earnings announcement (31 March 2018), 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Bharat Forge’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
View our latest analysis for Bharat Forge
Commentary On BHARATFORG’s Past Performance
BHARATFORG’s trailing twelve-month earnings (from 31 March 2018) of ₹7.6b has jumped 10% 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 12%, indicating the rate at which BHARATFORG is growing has slowed down. To understand what’s happening, let’s examine what’s transpiring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Bharat Forge has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 8.2% exceeds the IN Auto Components industry of 7.9%, indicating Bharat Forge has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Bharat Forge’s debt level, has increased over the past 3 years from 19% to 20%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 115% to 70% over the past 5 years.
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 Bharat Forge gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Bharat Forge to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for BHARATFORG’s future growth? Take a look at our free research report of analyst consensus for BHARATFORG’s outlook.
-
Financial Health: Are BHARATFORG’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.