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In this article, I will take a look at Lakshmi Machine Works Limited's (NSE:LAXMIMACH) most recent earnings update (31 March 2019) and compare these latest figures against its performance over the past few years, along with how the rest of LAXMIMACH'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.
Check out our latest analysis for Lakshmi Machine Works
How Well Did LAXMIMACH Perform?
LAXMIMACH's trailing twelve-month earnings (from 31 March 2019) of ₹1.9b has declined by -14% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -1.0%, indicating the rate at which LAXMIMACH is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Lakshmi Machine Works has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 4.7% is below the IN Machinery industry of 7.7%, indicating Lakshmi Machine Works's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Lakshmi Machine Works’s debt level, has declined over the past 3 years from 15% to 13%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Generally companies that face a drawn out period of diminishing earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry disruption and growth. You should continue to research Lakshmi Machine Works to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for LAXMIMACH’s future growth? Take a look at our free research report of analyst consensus for LAXMIMACH’s outlook.
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Financial Health: Are LAXMIMACH’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 March 2019. 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.