With A -12% Earnings Drop, Is Techno Electric & Engineering Company Limited's (NSE:TECHNOE) A Concern?

When Techno Electric & Engineering Company Limited (NSE:TECHNOE) released its most recent earnings update (30 June 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Techno Electric & Engineering's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not TECHNOE actually performed well. Below is a quick commentary on how I see TECHNOE has performed.

View our latest analysis for Techno Electric & Engineering

Did TECHNOE perform worse than its track record and industry?

TECHNOE's trailing twelve-month earnings (from 30 June 2019) of ₹1.8b has declined by -12% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 18%, indicating the rate at which TECHNOE is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and if the whole industry is facing the same headwind.

In terms of returns from investment, Techno Electric & Engineering has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 9.4% exceeds the IN Construction industry of 6.1%, indicating Techno Electric & Engineering has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Techno Electric & Engineering’s debt level, has declined over the past 3 years from 14% to 11%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Techno Electric & Engineering to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for TECHNOE’s future growth? Take a look at our free research report of analyst consensus for TECHNOE’s outlook.
2. Financial Health: Are TECHNOE’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.
3. 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 30 June 2019. This may not be consistent with full year annual report figures.

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