After looking at Housing and Urban Development Corporation Limited’s (NSEI:HUDCO) latest earnings announcement (31 March 2017), 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 Housing and Urban Development
Did HUDCO’s recent earnings growth beat the long-term trend and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to analyze many different companies in a uniform manner using the latest information. For Housing and Urban Development, its latest trailing-twelve-month earnings is ₹8.42B, which compared to the previous year’s figure, has increased by a somewhat subdued 7.60%. Since these figures are somewhat short-term, I have calculated an annualized five-year value for HUDCO’s earnings, which stands at ₹7.21B This shows that, generally, Housing and Urban Development has been able to consistently improve its net income over the past couple of years as well.
How has it been able to do this? Let’s see if it is solely due to an industry uplift, or if Housing and Urban Development has seen some company-specific growth. In the last couple of years, Housing and Urban Development increased its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Looking at growth from a sector-level, the IN diversified financial industry has been growing its average earnings by double-digit 41.01% in the prior year, and 16.44% over the previous five years. This shows that any tailwind the industry is benefiting from, Housing and Urban Development has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Housing and Urban Development to get a more holistic view of the stock by looking at: