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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on L&T Technology Services Limited (NSEI:LTTS) useful as an attempt to give more color around how L&T Technology Services is currently performing. View our latest analysis for L&T Technology Services
How LTTS fared against its long-term earnings performance and its industry
I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to assess different companies on a similar basis, using new information. For L&T Technology Services, its most recent earnings (trailing twelve month) is ₹4.32B, which, relative to the previous year’s figure, has risen by 25.01%. Given that these figures may be somewhat nearsighted, I’ve determined an annualized five-year figure for L&T Technology Services’s net income, which stands at ₹3.00B This shows that, on average, L&T Technology Services has been able to consistently improve its profits over the last couple of years as well.
What’s the driver of this growth? Let’s see whether it is only due to industry tailwinds, or if L&T Technology Services has experienced some company-specific growth. Over the past couple of years, L&T Technology Services increased its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Looking at growth from a sector-level, the IN professional services industry has been amplifying growth, more than doubling average earnings in the prior year, and a strong 33.49% over the last five years. This shows that whatever tailwind the industry is deriving benefit from, L&T Technology Services has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as L&T Technology Services gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research L&T Technology Services to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for LTTS’s future growth? Take a look at our free research report of analyst consensus for LTTS’s outlook.
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Financial Health: Is LTTS’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.