For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Jenson & Nicholson (India) Limited (NSEI:JENSONICOL) useful as an attempt to give more color around how Jenson & Nicholson (India) is currently performing. See our latest analysis for JENSONICOL
Could JENSONICOL beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 new information. For Jenson & Nicholson (India), the most recent bottom-line -₹127.8M, which, against the prior year’s level, has become less negative. Given that these figures are somewhat short-term, I have computed an annualized five-year value for JENSONICOL’s net income, which stands at ₹27.6M.
We can further examine Jenson & Nicholson (India)’s loss by looking at what has been happening in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over past few years has been relatively unexciting, remaining flat on average at -1.40%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be managing cost growth rates. Viewing growth from a sector-level, the IN chemicals industry has been growing its average earnings by double-digit 12.33% in the past year, and 11.37% over the past five. This means that, although Jenson & Nicholson (India) is presently unprofitable, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Jenson & Nicholson (India) may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Jenson & Nicholson (India) to get a more holistic view of the stock by looking at:
1. Financial Health: Is JENSONICOL’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.