After looking at LT Foods Limited’s (NSEI:DAAWAT) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for LT Foods
Were DAAWAT’s earnings stronger than its past performances and the industry?
I prefer to 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 enables me to assess various companies in a uniform manner using the latest information. For LT Foods, its most recent bottom-line (trailing twelve month) is IN₨1.35B, which compared to the previous year’s figure, has moved up by an impressive 51.35%. Since these values are relatively short-term thinking, I have computed an annualized five-year value for LT Foods’s earnings, which stands at IN₨659.60M This suggests that, generally, LT Foods has been able to consistently grow its profits over the past few years as well.
How has it been able to do this? Let’s take a look at whether it is merely due to an industry uplift, or if LT Foods has seen some company-specific growth. In the last couple of years, LT Foods increased its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Eyeballing growth from a sector-level, the IN food industry has been growing its average earnings by double-digit 19.75% in the prior year, and 15.91% over the past five years. This suggests that any uplift the industry is gaining from, LT Foods is able to leverage this to its advantage.
What does this mean?
Though LT Foods’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research LT Foods to get a more holistic view of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for DAAWAT’s future growth? Take a look at our free research report of analyst consensus for DAAWAT’s outlook.
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2. Financial Health: Is DAAWAT’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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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 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.