Stock Analysis

Where Kapston Facilities Management Limited (NSE:KAPSTON) Stands In Terms Of Earnings Growth Against Its Industry

NSEI:KAPSTON
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After looking at Kapston Facilities Management Limited's (NSEI:KAPSTON) latest earnings update (31 March 2017), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for Kapston Facilities Management

Did KAPSTON's recent earnings growth beat the long-term trend and the industry?

For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to analyze different companies on a more comparable basis, using the latest information. For Kapston Facilities Management, its latest trailing-twelve-month earnings is ₹30.60M, which, in comparison to the prior year's figure, has increased by 41.51%. Since these figures may be somewhat nearsighted, I have computed an annualized five-year figure for Kapston Facilities Management's earnings, which stands at ₹19.65M This means that, on average, Kapston Facilities Management has been able to gradually improve its net income over the past few years as well.

NSEI:KAPSTON Income Statement Apr 12th 18
NSEI:KAPSTON Income Statement Apr 12th 18
How has it been able to do this? Let's see if it is solely because of an industry uplift, or if Kapston Facilities Management has experienced some company-specific growth. The climb in earnings seems to be bolstered by a substantial top-line increase outstripping its growth rate of expenses. Though this has led to a margin contraction, it has made Kapston Facilities Management more profitable. Inspecting growth from a sector-level, the IN commercial services industry has been growing, albeit, at a subdued single-digit rate of 6.39% in the past twelve months, and a substantial 23.42% over the last five years. This suggests that any tailwind the industry is enjoying, Kapston Facilities Management is capable of leveraging this to its advantage.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Kapston Facilities Management to get a better picture of the stock by looking at:

  • 1. Financial Health: Is KAPSTON’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.
  • 2. 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 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.