Was Lumax Auto Technologies Limited's (NSE:LUMAXTECH) Earnings Growth Better Than The Industry's?
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Examining how Lumax Auto Technologies Limited (NSE:LUMAXTECH) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Lumax Auto Technologies is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its auto components industry peers.
View our latest analysis for Lumax Auto Technologies
Did LUMAXTECH's recent earnings growth beat the long-term trend and the industry?
LUMAXTECH's trailing twelve-month earnings (from 31 March 2019) of ₹532m has increased by 9.2% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.6%, indicating the rate at which LUMAXTECH is growing has accelerated. How has it been able to do this? Let's take a look at whether it is solely attributable to industry tailwinds, or if Lumax Auto Technologies has seen some company-specific growth.
In terms of returns from investment, Lumax Auto Technologies has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 6.1% is below the IN Auto Components industry of 7.8%, indicating Lumax Auto Technologies's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Lumax Auto Technologies’s debt level, has increased over the past 3 years from 15% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 23% to 13% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Lumax Auto Technologies 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 Lumax Auto Technologies to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for LUMAXTECH’s future growth? Take a look at our free research report of analyst consensus for LUMAXTECH’s outlook.
Financial Health: Are LUMAXTECH’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.
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.
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