When The Fertilisers And Chemicals Travancore Limited (NSEI:FACT) announced its most recent earnings (31 March 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Fertilisers And Chemicals Travancore performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see FACT has performed. View our latest analysis for Fertilisers And Chemicals Travancore

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

I look at 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 blend enables me to analyze different stocks on a more comparable basis, using new information. For Fertilisers And Chemicals Travancore, its most recent earnings (trailing twelve month) is -₹1.99B, which compared to last year’s figure, has become less negative. Given that these values are somewhat myopic, I have created an annualized five-year figure for FACT’s earnings, which stands at -₹2.45B. This means that, while net income is negative, it has become less negative over the years.

We can further analyze Fertilisers And Chemicals Travancore’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Fertilisers And Chemicals Travancore has seen an annual decline in revenue of -7.33%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the IN chemicals industry has been growing its average earnings by double-digit 20.31% in the previous year, and a more subdued 9.76% over the past five years. This shows that, despite the fact that Fertilisers And Chemicals Travancore is currently loss-making, it may have gained from industry tailwinds, moving earnings in the right direction.

What does this mean?

Fertilisers And Chemicals Travancore’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Fertilisers And Chemicals Travancore may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Fertilisers And Chemicals Travancore to get a more holistic view of the stock by looking at: