Understanding Monte Carlo Fashions Limited’s (NSE:MONTECARLO) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Monte Carlo Fashions is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.

View our latest analysis for Monte Carlo Fashions

Were MONTECARLO’s earnings stronger than its past performances and the industry?

MONTECARLO’s trailing twelve-month earnings (from 31 December 2018) of ₹616m has increased by 3.9% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.0%, indicating the rate at which MONTECARLO is growing has accelerated. What’s the driver of this growth? Let’s see whether it is solely due to an industry uplift, or if Monte Carlo Fashions has seen some company-specific growth.

In terms of returns from investment, Monte Carlo Fashions has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.9% exceeds the IN Luxury industry of 5.9%, indicating Monte Carlo Fashions has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Monte Carlo Fashions’s debt level, has declined over the past 3 years from 19% to 16%.

What does this mean?

Though Monte Carlo Fashions’s past data is helpful, it is only one aspect of my investment thesis. While Monte Carlo Fashions has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Monte Carlo Fashions to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for MONTECARLO’s future growth? Take a look at our free research report of analyst consensus for MONTECARLO’s outlook.

2. Financial Health: Are MONTECARLO’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.

3. 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.