Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at JBM Auto Limited’s (NSEI:JBMA) 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.
Was JBMA’s recent earnings decline worse than the long-term trend and the industry?
JBMA’s trailing twelve-month earnings (from 30 September 2019) of ₹722m has declined by -5.8% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 2.7%, indicating the rate at which JBMA is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, JBM Auto has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 7.7% exceeds the IN Auto Components industry of 6.7%, indicating JBM Auto has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for JBM Auto’s debt level, has increased over the past 3 years from 18% to 19%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 101% to 91% over the past 5 years.
What does this mean?
JBM Auto’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research JBM Auto to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for JBMA’s future growth? Take a look at our free research report of analyst consensus for JBMA’s outlook.
- Financial Health: Are JBMA’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 September 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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