How Does Somany Ceramics Limited's (NSE:SOMANYCERA) Earnings Growth Stack Up Against Industry Performance?

In this article, I will take a look at Somany Ceramics Limited's (NSEI:SOMANYCERA) most recent earnings update (31 March 2017) and compare these latest figures against its performance over the past few years, along with how the rest of SOMANYCERA's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Somany Ceramics

How Well Did SOMANYCERA Perform?

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze various companies on a similar basis, using the latest information. For Somany Ceramics, its latest earnings (trailing twelve month) is ₹930.68M, which compared to the prior year's level, has moved up by 43.86%. Since these figures are fairly short-term, I’ve estimated an annualized five-year value for SOMANYCERA's net income, which stands at ₹448.58M This shows that, on average, Somany Ceramics has been able to increasingly raise its bottom line over the last few years as well.

What's enabled this growth? Let's see whether it is only owing to industry tailwinds, or if Somany Ceramics has experienced some company-specific growth. In the past couple of years, Somany Ceramics increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Scanning growth from a sector-level, the IN building industry has been growing its average earnings by double-digit 18.86% over the previous twelve months, and 13.29% over the past half a decade. This suggests that any uplift the industry is profiting from, Somany Ceramics is able to amplify this to its advantage.

What does this mean?

Though Somany Ceramics's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Somany Ceramics gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Somany Ceramics 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 SOMANYCERA’s future growth? Take a look at this free research report of analyst consensus for SOMANYCERA’s outlook.
• 2. Financial Health: Is SOMANYCERA’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.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.