Examining Transport Corporation of India Limited’s (NSEI:TCI) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess TCI’s latest performance announced on 31 March 2017 and weigh these figures against its longer term trend and industry movements. Check out our latest analysis for Transport of India

Did TCI’s recent earnings growth beat the long-term trend and the industry?

For the purpose of this commentary, I like to use data from the most recent 12 months, 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 method allows me to assess many different companies on a more comparable basis, using the most relevant data points. For Transport of India, its most recent trailing-twelve-month earnings is ₹806.93M, which, relative to last year’s level, has risen by 43.80%. Given that these values are relatively myopic, I have estimated an annualized five-year figure for Transport of India’s earnings, which stands at ₹669.95M This shows that, on average, Transport of India has been able to consistently grow its net income over the last couple of years as well.

What’s enabled this growth? Let’s take a look at whether it is solely due to an industry uplift, or if Transport of India has experienced some company-specific growth. In the past couple of years, Transport of India expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the IN logistics industry has been growing its average earnings by double-digit 32.15% over the prior twelve months, and 18.78% over the last five years. This means whatever uplift the industry is profiting from, Transport of India is capable of leveraging this to its advantage.

What does this mean?

Though Transport of India’s past data is helpful, it is only one aspect of my investment thesis. While Transport of India has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Transport of India to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for TCI’s future growth? Take a look at our free research report of analyst consensus for TCI’s outlook.

• 2. Financial Health: Is TCI’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.

• 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 March 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.