After looking at InterGlobe Aviation Limited’s (NSEI:INDIGO) latest earnings announcement (30 June 2017), 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. See our latest analysis for InterGlobe Aviation

How Well Did INDIGO Perform?

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 method enables me to examine different stocks on a more comparable basis, using the most relevant data points. “For InterGlobe Aviation, its “, most recent twelve-month earnings is ₹18,785.1M, which compared to the previous year’s level, has plunged by -3.30%. Since these values may be fairly nearsighted, I’ve determined an annualized five-year value for InterGlobe Aviation’s earnings, which stands at ₹13,755.6M. This means that even though earnings declined from the prior year, over time, InterGlobe Aviation’s earnings have been increasing on average.

How has it been able to do this? Well, let’s take a look at whether it is merely owing to an industry uplift, or if InterGlobe Aviation has seen some company-specific growth. In the past couple of years, InterGlobe Aviation increased its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the IN airlines industry has been enduring some headwinds over the past twelve months, leading to an average earnings drop of -3.42%. This is a momentous change, given that the industry has constantly been delivering a a notable growth of 13.62% in the past five years. This suggests that any near-term headwind the industry is enduring, InterGlobe Aviation is less exposed compared to its peers.

What does this mean?

Though InterGlobe Aviation’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have volatile earnings, can have many factors impacting its business. I suggest you continue to research InterGlobe Aviation to get a more holistic view of the stock by looking at:

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