For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on State Bank of India (NSEI:SBIN) useful as an attempt to give more color around how State Bank of India is currently performing. See our latest analysis for State Bank of India
Was SBIN’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to analyze different stocks on a more comparable basis, using the latest information. For State Bank of India, its latest trailing-twelve-month earnings is ₹80.43M, which compared to the prior year’s figure, has taken a dive by a large -99.82%. Given that these values may be fairly nearsighted, I have estimated an annualized five-year figure for SBIN’s net income, which stands at ₹122.26B This doesn’t seem to paint a better picture, as earnings seem to have steadily been falling over time.Why could this be happening? Well, let’s look at what’s occurring with margins and if the whole industry is facing the same headwind. Revenue growth in the last couple of years, has been positive, nevertheless earnings growth has been declining. This means State Bank of India has been ramping up expenses, which is hurting margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the IN banks industry has been growing its average earnings by double-digit 10.02% over the previous year, and a flatter 0.55% over the last five years. This means that whatever uplift the industry is profiting from, State Bank of India has not been able to gain as much as its industry peers.
What does this mean?
Though State Bank of India’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that face a drawn out period of decline in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. You should continue to research State Bank of India to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Future Outlook: What are well-informed industry analysts predicting for SBIN’s future growth? Take a look at this free research report of analyst consensus for SBIN’s outlook.
- 2. Financial Health: Is SBIN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.