Understanding how V-Guard Industries Limited (NSE:VGUARD) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how V-Guard Industries is doing by comparing its latest earnings with its long-term trend as well as the performance of its electrical industry peers.

See our latest analysis for V-Guard Industries

Despite a decline, did VGUARD underperform the long-term trend and the industry?

VGUARD’s trailing twelve-month earnings (from 31 March 2018) of ₹1.3b has declined by -7.2% 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 21%, indicating the rate at which VGUARD is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and whether the whole industry is experiencing the hit as well.

In terms of returns from investment, V-Guard Industries has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 11% exceeds the IN Electrical industry of 6.7%, indicating V-Guard Industries has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for V-Guard Industries’s debt level, has declined over the past 3 years from 28% to 22%.

What does this mean?

V-Guard Industries’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research V-Guard Industries to get a more holistic view of the stock by looking at:

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

2. Financial Health: Are VGUARD’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 March 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.