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After looking at Jet Airways (India) Limited’s (NSEI:JETAIRWAYS) latest earnings announcement (31 December 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. View our latest analysis for Jet Airways (India)
Was JETAIRWAYS’s recent earnings decline worse than the long-term trend and the industry?
For the purpose of this commentary, I like to 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 method enables me to assess various companies in a uniform manner using new information. For Jet Airways (India), its most recent trailing-twelve-month earnings is -IN₨1.10B, which, in comparison to last year’s level, has turned from positive to negative. Given that these figures are relatively short-term, I have created an annualized five-year figure for JETAIRWAYS’s net income, which stands at -IN₨3.23B. This suggests that, though net income is negative, it has become less negative over the years.
We can further evaluate Jet Airways (India)’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Jet Airways (India)’s top-line has risen by a mere 6.10%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the IN airlines industry has been relatively flat in terms of earnings growth in the past twelve months, settling down from a robust 15.44% over the past half a decade. This suggests that whatever near-term headwind the industry is facing, it’s hitting Jet Airways (India) harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Jet Airways (India) may be facing and whether management guidance has dependably been met in the past. You should continue to research Jet Airways (India) to get a better picture of the stock by looking at: