In This Article:
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In this article, I will take a look at KSB Limited's (NSE:KSB) most recent earnings update (31 December 2018) and compare these latest figures against its performance over the past few years, along with how the rest of KSB's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
See our latest analysis for KSB
Have KSB's earnings improved against past performances and the industry?
KSB's trailing twelve-month earnings (from 31 December 2018) of ₹716m has increased by 1.0% 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 1.3%, indicating the rate at which KSB is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, KSB has fallen short of achieving a 20% return on equity (ROE), recording 9.4% instead. Furthermore, its return on assets (ROA) of 5.1% is below the IN Machinery industry of 7.2%, indicating KSB's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for KSB’s debt level, has declined over the past 3 years from 13% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.6% to 5.7% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While KSB has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research KSB to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for KSB’s future growth? Take a look at our free research report of analyst consensus for KSB’s outlook.
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Financial Health: Are KSB’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.
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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 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.