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Assessing eClerx Services Limited’s (NSEI:ECLERX) 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 ECLERX’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for eClerx Services
Was ECLERX’s weak performance lately a part of a long-term decline?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to assess various companies on a more comparable basis, using the most relevant data points. For eClerx Services, its latest trailing-twelve-month earnings is ₹3.01B, which compared to last year’s level, has fallen by -25.07%. Since these values are somewhat short-term thinking, I’ve calculated an annualized five-year figure for ECLERX’s earnings, which stands at ₹2.52B This means although earnings declined from the prior year, over a longer period of time, eClerx Services’s earnings have been growing on average.
What’s enabled this growth? Let’s see whether it is only due to industry tailwinds, or if eClerx Services has seen some company-specific growth. The climb in earnings seems to be propelled by a strong top-line increase outstripping its growth rate of expenses. Though this has caused a margin contraction, it has made eClerx Services more profitable. Looking at growth from a sector-level, the IN it industry has been growing its average earnings by double-digit 10.06% in the previous twelve months, and 13.00% over the past five years. This means whatever tailwind the industry is profiting from, eClerx Services has not been able to realize the gains unlike its industry peers.
What does this mean?
eClerx Services’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 affecting its business. I suggest you continue to research eClerx Services 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 ECLERX’s future growth? Take a look at our free research report of analyst consensus for ECLERX’s outlook.
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Financial Health: Is ECLERX’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 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.