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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Shakti Pumps (India) Limited (NSE:SHAKTIPUMP) useful as an attempt to give more color around how Shakti Pumps (India) is currently performing.
How SHAKTIPUMP fared against its long-term earnings performance and its industry
SHAKTIPUMP’s trailing twelve-month earnings (from 31 March 2019) of ₹451m has jumped 32% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which SHAKTIPUMP is growing has accelerated. What’s the driver of this growth? Let’s take a look at whether it is merely because of industry tailwinds, or if Shakti Pumps (India) has experienced some company-specific growth.
In terms of returns from investment, Shakti Pumps (India) has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 11% exceeds the IN Machinery industry of 7.7%, indicating Shakti Pumps (India) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Shakti Pumps (India)’s debt level, has increased over the past 3 years from 6.9% to 23%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 85% to 58% over the past 5 years.
What does this mean?
Shakti Pumps (India)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Shakti Pumps (India) gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Shakti Pumps (India) to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SHAKTIPUMP’s future growth? Take a look at our free research report of analyst consensus for SHAKTIPUMP’s outlook.
- Financial Health: Are SHAKTIPUMP’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 email@example.com. 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.