Assessing HeidelbergCement India Limited’s (NSE:HEIDELBERG) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how HeidelbergCement India is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its basic materials industry peers.
How HEIDELBERG fared against its long-term earnings performance and its industry
HEIDELBERG’s trailing twelve-month earnings (from 30 June 2019) of ₹2.5b has jumped 48% 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 49%, indicating the rate at which HEIDELBERG is growing has slowed down. To understand what’s happening, let’s take a look at what’s going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, HeidelbergCement India has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the IN Basic Materials industry of 5.8%, indicating HeidelbergCement India has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for HeidelbergCement India’s debt level, has increased over the past 3 years from 11% to 23%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 144% to 33% over the past 5 years.
What does this mean?
HeidelbergCement India’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While HeidelbergCement India 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 HeidelbergCement India to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HEIDELBERG’s future growth? Take a look at our free research report of analyst consensus for HEIDELBERG’s outlook.
- Financial Health: Are HEIDELBERG’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.
- 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 30 June 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.