In This Article:
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In this article, I will take a look at PPAP Automotive Limited's (NSE:PPAP) 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 PPAP'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 PPAP Automotive
Was PPAP weak performance lately part of a long-term decline?
PPAP's trailing twelve-month earnings (from 31 March 2019) of ₹337m 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 39%, indicating the rate at which PPAP is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, PPAP Automotive has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 9.1% exceeds the IN Auto Components industry of 7.6%, indicating PPAP Automotive has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for PPAP Automotive’s debt level, has increased over the past 3 years from 11% to 16%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 23% to 5.7% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I suggest you continue to research PPAP Automotive 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 PPAP’s future growth? Take a look at our free research report of analyst consensus for PPAP’s outlook.
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Financial Health: Are PPAP’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.