After reading JBM Auto Limited’s (NSE:JBMA) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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.
How Well Did JBMA Perform?
JBMA’s trailing twelve-month earnings (from 31 December 2018) of ₹796m has jumped 26% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.2%, indicating the rate at which JBMA is growing has accelerated. What’s the driver of this growth? Let’s see if it is merely owing to industry tailwinds, or if JBM Auto has experienced some company-specific growth.
In terms of returns from investment, JBM Auto has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 8.5% exceeds the IN Auto Components industry of 7.6%, indicating JBM Auto has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for JBM Auto’s debt level, has declined over the past 3 years from 21% to 21%.
What does this mean?
Though JBM Auto’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 suggest 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 31 December 2018. This may not be consistent with full year annual report figures.
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