For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Finolex Industries Limited’s (NSE:FINOLEXIND) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
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Was FINOLEXIND weak performance lately part of a long-term decline?
FINOLEXIND’s trailing twelve-month earnings (from 31 March 2018) of ₹3.1b has declined by -14% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 18%, indicating the rate at which FINOLEXIND is growing has slowed down. Why is this? Let’s examine what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Finolex Industries has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 8.7% exceeds the IN Chemicals industry of 8.2%, indicating Finolex Industries has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Finolex Industries’s debt level, has declined over the past 3 years from 15% to 14%.
What does this mean?
Though Finolex Industries’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Finolex Industries to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for FINOLEXIND’s future growth? Take a look at our free research report of analyst consensus for FINOLEXIND’s outlook.
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Financial Health: Are FINOLEXIND’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.
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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 March 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.