For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Union Bank of India’s (NSEI:UNIONBANK) 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. See our latest analysis for Union Bank of India

How Well Did UNIONBANK Perform?

I 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 technique enables me to analyze different stocks on a similar basis, using the most relevant data points. For Union Bank of India, its most recent trailing-twelve-month earnings is ₹5.73B, which, relative to the prior year’s figure, has dropped by a non-trivial -57.78%. Given that these values are fairly short-term, I’ve computed an annualized five-year value for UNIONBANK’s net income, which stands at ₹16.76B This doesn’t look much better, as earnings seem to have consistently been falling over time.

Why is this? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is experiencing the hit as well. Revenue growth in the past couple of years, has been positive, however earnings growth has been declining. This means Union Bank of India has been growing expenses, which is hurting margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the IN banks industry has been growing its average earnings by double-digit 10.02% in the previous year, and a flatter 0.55% over the past five years. This means whatever uplift the industry is benefiting from, Union Bank of India has not been able to gain as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. In some cases, companies that experience an extended period of decline in earnings are going through some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. You should continue to research Union Bank of India to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for UNIONBANK’s future growth? Take a look at our free research report of analyst consensus for UNIONBANK’s outlook.

• 2. Financial Health: Is UNIONBANK’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.

• 3. 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 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.