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Examining McNally Bharat Engineering Company Limited’s (NSEI:MBECL) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess MBECL’s latest performance announced on 31 March 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for McNally Bharat Engineering
Did MBECL beat its long-term earnings growth trend and its industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to analyze many different companies in a uniform manner using the latest information. For McNally Bharat Engineering, its most recent bottom-line (trailing twelve month) is -₹646.47M, which compared to the prior year’s level, has become less negative. Since these figures may be fairly nearsighted, I’ve determined an annualized five-year figure for McNally Bharat Engineering’s earnings, which stands at -₹694.07M. This means that, while net income is negative, it has become less negative over the years.
We can further analyze McNally Bharat Engineering’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade McNally Bharat Engineering’s revenue growth has been relatively soft, with an annual growth rate of -1.08%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Inspecting growth from a sector-level, the IN construction industry has been growing its average earnings by double-digit 16.92% in the prior year, and a less exciting 4.68% over the past five years. This means despite the fact that McNally Bharat Engineering is presently loss-making, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
McNally Bharat Engineering’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues McNally Bharat Engineering may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research McNally Bharat Engineering to get a better picture of the stock by looking at: