Assessing Greaves Cotton Limited’s (NSEI:GREAVESCOT) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Greaves Cotton is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its machinery industry peers. See our latest analysis for Greaves Cotton
How Well Did GREAVESCOT Perform?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 examine many different companies on a similar basis, using the latest information. For Greaves Cotton, its most recent bottom-line (trailing twelve month) is ₹1,841.4M, which, relative to the prior year’s figure, has dropped by -9.12%. Given that these figures are somewhat nearsighted, I have created an annualized five-year figure for Greaves Cotton’s earnings, which stands at ₹1,570.2M. This means that though earnings declined from the previous year, over the long run, Greaves Cotton’s profits have been increasing on average.
What’s enabled this growth? Well, let’s take a look at if it is merely a result of industry tailwinds, or if Greaves Cotton has seen some company-specific growth. In the last few years, Greaves Cotton increased bottom-line, while its top-line fell, by successfully managing its costs. This has caused to a margin expansion and profitability over time. Scanning growth from a sector-level, the IN machinery industry has been growing its average earnings by double-digit 14.32% over the prior twelve months, and a flatter -0.50% over the past five years. This means in the recent industry expansion, Greaves Cotton has not been able to reap as much as its average peer.
What does this mean?
Though Greaves Cotton’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research Greaves Cotton to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for GREAVESCOT’s future growth? Take a look at our free research report of analyst consensus for GREAVESCOT’s outlook.
2. Financial Health: Is GREAVESCOT’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.