After looking at Sita Shree Food Products Limited’s (NSEI:SITASHREE) latest earnings announcement (31 December 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. See our latest analysis for Sita Shree Food Products
How Well Did SITASHREE Perform?
I like to use the ‘latest twelve-month’ data, 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 enables me to examine various companies in a uniform manner using new information. For Sita Shree Food Products, its most recent bottom-line (trailing twelve month) is -₹421.56M, which, relative to the previous year’s level, has become less negative. Since these values may be fairly nearsighted, I’ve determined an annualized five-year figure for Sita Shree Food Products’s earnings, which stands at -₹271.50M. This suggests that, Sita Shree Food Products has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.
We can further assess Sita Shree Food Products’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Sita Shree Food Products’s top-line has grown by a mere 8.72%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the IN food industry has been growing its average earnings by double-digit 26.88% over the prior year, and 16.86% over the previous five years. This means even though Sita Shree Food Products is currently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Sita Shree Food Products’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Sita Shree Food Products may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Sita Shree Food Products to get a better picture of the stock by looking at: