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Assessing HPL Electric & Power Limited’s (NSE:HPL) 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 HPL Electric & Power is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its electrical industry peers.
Did HPL beat its long-term earnings growth trend and its industry?
HPL’s trailing twelve-month earnings (from 31 March 2019) of ₹325m has jumped 19% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.6%, indicating the rate at which HPL is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is solely because of an industry uplift, or if HPL Electric & Power has experienced some company-specific growth.
In terms of returns from investment, HPL Electric & Power has fallen short of achieving a 20% return on equity (ROE), recording 4.5% instead. Furthermore, its return on assets (ROA) of 6.0% is below the IN Electrical industry of 7.1%, indicating HPL Electric & Power’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for HPL Electric & Power’s debt level, has declined over the past 3 years from 24% to 13%.
What does this mean?
Though HPL Electric & Power’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as HPL Electric & Power gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research HPL Electric & Power to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HPL’s future growth? Take a look at our free research report of analyst consensus for HPL’s outlook.
- Financial Health: Are HPL’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 March 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 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. Thank you for reading.