After looking at Maheshwari Logistics Limited’s (NSE:MAHESHWARI) latest earnings update (31 March 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
View our latest analysis for Maheshwari Logistics
Did MAHESHWARI’s recent earnings growth beat the long-term trend and the industry?
MAHESHWARI’s trailing twelve-month earnings (from 31 March 2018) of ₹116m has jumped 20% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 20%, indicating the rate at which MAHESHWARI is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Maheshwari Logistics has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 5.8% is below the IN Transportation industry of 7.3%, indicating Maheshwari Logistics’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Maheshwari Logistics’s debt level, has declined over the past 3 years from 15% to 10%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 115% to 126% over the past 5 years.
What does this mean?
Though Maheshwari Logistics’s past data is helpful, it is only one aspect of my investment thesis. While Maheshwari Logistics has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Maheshwari Logistics 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 MAHESHWARI’s future growth? Take a look at our free research report of analyst consensus for MAHESHWARI’s outlook.
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Financial Health: Are MAHESHWARI’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.