Today I will take a look at Venky’s (India) Limited’s (NSEI:VENKYS) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the food industry performed. As an investor, I find it beneficial to assess VENKYS’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for Venky’s (India)
How Did VENKYS’s Recent Performance Stack Up Against Its Past?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to analyze various companies on a similar basis, using the most relevant data points. For Venky’s (India), its most recent earnings (trailing twelve month) is ₹1.90B, which, against the previous year’s level, has risen by over 100%. Given that these figures may be relatively myopic, I have calculated an annualized five-year figure for Venky’s (India)’s net income, which stands at ₹542.00M This means generally, Venky’s (India) has been able to consistently grow its earnings over the last few years as well.
What’s the driver of this growth? Let’s take a look at whether it is merely owing to an industry uplift, or if Venky’s (India) has experienced some company-specific growth. Over the last couple of years, Venky’s (India) increased its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the IN food industry has been growing its average earnings by double-digit 22.25% in the prior twelve months, and 15.06% over the past half a decade. This suggests that whatever uplift the industry is enjoying, Venky’s (India) is able to leverage this to its advantage.
What does this mean?
Venky’s (India)’s track record can be a valuable insight into its earnings performance, but it certainly 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 Venky’s (India) to get a more holistic view of the stock by looking at:
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1. Financial Health: Is VENKYS’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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2. Valuation: What is VENKYS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether VENKYS is currently mispriced by the market.
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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 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.