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Examining Nelco Limited’s (NSEI:NELCO) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess NELCO’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements. Check out our latest analysis for Nelco

Could NELCO beat the long-term trend and outperform its industry?

I prefer to use the ‘latest twelve-month’ data, 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 enables me to analyze different companies in a uniform manner using the latest information. For Nelco, its latest trailing-twelve-month earnings is IN₨92.50M, which compared to the prior year’s level, has increased by 33.70%. Since these values are relatively short-term thinking, I have estimated an annualized five-year figure for NELCO’s earnings, which stands at -IN₨20.16M This shows that, generally, Nelco has been able to gradually improve its earnings over the last few years as well.

What’s enabled this growth? Let’s take a look at whether it is solely a result of an industry uplift, or if Nelco has seen some company-specific growth. In the past couple of years, Nelco expanded bottom-line, while its top-line declined, by effectively controlling its costs. This has caused to a margin expansion and profitability over time. Looking at growth from a sector-level, the IN communications industry has been growing its average earnings by double-digit 13.29% over the prior twelve months, and 21.01% over the past half a decade. This suggests that whatever tailwind the industry is profiting from, Nelco is able to leverage this to its advantage.

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 Nelco gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Nelco to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is NELCO’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. Valuation: What is NELCO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NELCO is currently mispriced by the market.

• 3. 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 December 2017. 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.