For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Vakrangee Limited (NSEI:VAKRANGEE) useful as an attempt to give more color around how Vakrangee is currently performing. See our latest analysis for Vakrangee

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

I like 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 allows me to analyze many different companies in a uniform manner using the most relevant data points. For Vakrangee, its most recent earnings (trailing twelve month) is ₹7.56B, which, against the previous year’s figure, has risen by a non-trivial 54.81%. Since these figures are fairly short-term thinking, I’ve determined an annualized five-year figure for Vakrangee’s earnings, which stands at ₹3.76B This suggests that, on average, Vakrangee has been able to increasingly raise its earnings over the last few years as well.

How has it been able to do this? Let’s take a look at whether it is solely attributable to industry tailwinds, or if Vakrangee has seen some company-specific growth. In the last few years, Vakrangee expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Eyeballing growth from a sector-level, the IN it industry has been growing, albeit, at a muted single-digit rate of 7.17% in the prior twelve months, and a substantial 13.35% over the past five. This means any tailwind the industry is enjoying, Vakrangee is capable of leveraging this to its advantage.

What does this mean?

Though Vakrangee’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Vakrangee gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Vakrangee to get a more holistic view of the stock by looking at:

1. Financial Health: Is VAKRANGEE’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 VAKRANGEE 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 VAKRANGEE 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.