Today I will take a look at Lumax Industries Limited’s (NSEI:LUMAXIND) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the auto components industry performed. As an investor, I find it beneficial to assess LUMAXIND’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for Lumax Industries

Did LUMAXIND’s recent earnings growth beat the long-term trend and the industry?

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to examine many different companies in a uniform manner using the most relevant data points. “For Lumax Industries, its “, latest earnings is ₹612.8M, which, against last year’s level, has risen by a relatively unexciting 7.51%. Since these figures may be fairly myopic, I have computed an annualized five-year figure for Lumax Industries’s earnings, which stands at ₹258.3M. This means that, generally, Lumax Industries has been able to steadily raise its profits over the last couple of years as well.

How has it been able to do this? Let’s see if it is only owing to an industry uplift, or if Lumax Industries has seen some company-specific growth. Over the past few years, Lumax Industries expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the IN auto components industry has been growing its average earnings by double-digit 10.24% over the past year, and 11.47% over the past five years. This means whatever uplift the industry is benefiting from, Lumax Industries has not been able to reap as much as its average peer.

What does this mean?

Lumax Industries’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Lumax Industries has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Lumax Industries to get a more holistic view of the stock by looking at:

1. Financial Health: Is LUMAXIND’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.

2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.