Was Shanthi Gears Limited’s (NSE:SHANTIGEAR) Earnings Growth Better Than The Industry’s?
After reading Shanthi Gears Limited’s (NSE:SHANTIGEAR) latest earnings update (30 September 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether SHANTIGEAR has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Check out our latest analysis for Shanthi Gears
How Did SHANTIGEAR’s Recent Performance Stack Up Against Its Past?
SHANTIGEAR’s trailing twelve-month earnings (from 30 September 2018) of ₹339m has jumped 47% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 18%, indicating the rate at which SHANTIGEAR is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is solely owing to an industry uplift, or if Shanthi Gears has seen some company-specific growth.
In terms of returns from investment, Shanthi Gears has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 6.1% is below the IN Machinery industry of 7.2%, indicating Shanthi Gears’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Shanthi Gears’s debt level, has increased over the past 3 years from 3.1% to 7.9%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Shanthi Gears to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SHANTIGEAR’s future growth? Take a look at our free research report of analyst consensus for SHANTIGEAR’s outlook.
Financial Health: Are SHANTIGEAR’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 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.