In This Article:
After looking at INOX Leisure Limited's (NSE:INOXLEISUR) latest earnings announcement (30 June 2019), 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.
View our latest analysis for INOX Leisure
Did INOXLEISUR beat its long-term earnings growth trend and its industry?
INOXLEISUR's trailing twelve-month earnings (from 30 June 2019) of ₹1.2b has increased by 3.3% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 32%, indicating the rate at which INOXLEISUR is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, INOX Leisure has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 13% exceeds the IN Entertainment industry of 4.4%, indicating INOX Leisure has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for INOX Leisure’s debt level, has increased over the past 3 years from 13% to 22%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 58% to 7.8% over the past 5 years.
What does this mean?
INOX Leisure's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as INOX Leisure gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research INOX Leisure to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for INOXLEISUR’s future growth? Take a look at our free research report of analyst consensus for INOXLEISUR’s outlook.
-
Financial Health: Are INOXLEISUR’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.
-
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.