Was Ushanti Colour Chem Limited's (NSE:UCL) Earnings Decline Part Of A Broader Industry Downturn?
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Assessing Ushanti Colour Chem Limited's (NSE:UCL) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess UCL's latest performance announced on 31 March 2019 and evaluate these figures to its historical trend and industry movements.
Check out our latest analysis for Ushanti Colour Chem
How Did UCL's Recent Performance Stack Up Against Its Past?
UCL's trailing twelve-month earnings (from 31 March 2019) of ₹22m has declined by -8.5% 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 15%, indicating the rate at which UCL is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Ushanti Colour Chem has fallen short of achieving a 20% return on equity (ROE), recording 9.5% instead. Furthermore, its return on assets (ROA) of 8.0% is below the IN Chemicals industry of 9.1%, indicating Ushanti Colour Chem's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Ushanti Colour Chem’s debt level, has increased over the past 3 years from 12% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 110% to 40% 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 impacting its business. I recommend you continue to research Ushanti Colour Chem to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for UCL’s future growth? Take a look at our free research report of analyst consensus for UCL’s outlook.
Financial Health: Are UCL’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.
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.