After reading TCNS Clothing Co. Limited’s (NSEI:TCNSBRANDS) latest earnings update (31 December 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether TCNSBRANDS has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Did TCNSBRANDS’s recent earnings growth beat the long-term trend and the industry?
TCNSBRANDS’s trailing twelve-month earnings (from 31 December 2019) of ₹1.3b has increased by 4.4% 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 36%, indicating the rate at which TCNSBRANDS is growing has slowed down. To understand what’s happening, let’s take a look at what’s going on with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, TCNS Clothing has invested its equity funds well leading to a 20% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the IN Luxury industry of 5.8%, indicating TCNS Clothing has used its assets more efficiently. However, its return on capital (ROC), which also accounts for TCNS Clothing’s debt level, has declined over the past 3 years from 26% to 16%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as TCNS Clothing gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research TCNS Clothing to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TCNSBRANDS’s future growth? Take a look at our free research report of analyst consensus for TCNSBRANDS’s outlook.
- Financial Health: Are TCNSBRANDS’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 31 December 2019. This may not be consistent with full year annual report figures.
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