Measuring Himachal Futuristic Communications Limited’s (NSEI:HFCL) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess HFCL’s recent performance announced on 31 March 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for Himachal Futuristic Communications
Was HFCL weak performance lately part of a long-term decline?
I use 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 assess different stocks on a similar basis, using the latest information. “For Himachal Futuristic Communications, its “, most recent bottom-line is ₹1,229.3M, which, against last year’s figure, has plunged by a non-trivial -53.71%. Since these figures are fairly myopic, I have computed an annualized five-year figure for HFCL’s net income, which stands at ₹1,673.7M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been falling over the longer term.
What could be happening here? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat. Revenue growth over the past few years, has been positive, however, earnings growth has been lagging behind meaning Himachal Futuristic Communications has been increasing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the IN telcos industry has been growing, albeit, at a subdued single-digit rate of 6.80% over the prior twelve months, and 4.62% over the past five. This suggests that any uplift the industry is profiting from, Himachal Futuristic Communications has not been able to gain as much as its average peer.
What does this mean?
Himachal Futuristic Communications’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that experience an extended period of decline in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. You should continue to research Himachal Futuristic Communications to get a better picture of the stock by looking at:
1. Financial Health: Is HFCL’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.