For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Pee Cee Cosma Sope Ltd’s (BOM:524136) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Pee Cee Cosma Sope
Could 524136 beat the long-term trend and outperform its industry?524136’s trailing twelve-month earnings (from 31 March 2018) of ₹36.69m has more than doubled from ₹15.61m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 14.75%, indicating the rate at which 524136 is growing has accelerated. What’s enabled this growth? Let’s see if it is merely because of industry tailwinds, or if Pee Cee Cosma Sope has experienced some company-specific growth.
In the last couple of years, Pee Cee Cosma Sope grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the IN household products industry has been enduring some headwinds over the previous twelve months, leading to an average earnings drop of -10.60%. This is a significant change, given that the industry has constantly been delivering a a strong growth of 23.30% in the last five years. This means any near-term headwind the industry is enduring, Pee Cee Cosma Sope is relatively better-cushioned than its peers.In terms of returns from investment, Pee Cee Cosma Sope has not invested its equity funds well, leading to a 17.96% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 14.54% exceeds the IN Household Products industry of 11.83%, indicating Pee Cee Cosma Sope has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Pee Cee Cosma Sope’s debt level, has increased over the past 3 years from 12.55% to 26.70%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 30.65% to 13.45% over the past 5 years.
What does this mean?
Though Pee Cee Cosma Sope’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Pee Cee Cosma Sope gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Pee Cee Cosma Sope to get a better picture of the stock by looking at:
- Financial Health: Is 524136’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.
- Valuation: What is 524136 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 524136 is currently mispriced by the market.
- 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.