Does Pearl Global Industries Limited’s (NSE:PGIL) 30% Earnings Growth Make It An Outperformer?

When Pearl Global Industries Limited (NSE:PGIL) announced its most recent earnings (30 September 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Pearl Global Industries performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see PGIL has performed.

View our latest analysis for Pearl Global Industries

Could PGIL beat the long-term trend and outperform its industry?

PGIL’s trailing twelve-month earnings (from 30 September 2018) of ₹310m has jumped 30% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -0.8%, indicating the rate at which PGIL is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is merely a result of industry tailwinds, or if Pearl Global Industries has experienced some company-specific growth.

NSEI:PGIL Income Statement Export December 14th 18
NSEI:PGIL Income Statement Export December 14th 18

In terms of returns from investment, Pearl Global Industries has fallen short of achieving a 20% return on equity (ROE), recording 6.8% instead. Furthermore, its return on assets (ROA) of 4.8% is below the IN Luxury industry of 5.8%, indicating Pearl Global Industries’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Pearl Global Industries’s debt level, has declined over the past 3 years from 13% to 2.6%.

What does this mean?

Though Pearl Global Industries’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook. There could be variables that are affecting the industry as a whole, thus the high industry growth rate over the same time frame. I suggest you continue to research Pearl Global Industries to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for PGIL’s future growth? Take a look at our free research report of analyst consensus for PGIL’s outlook.
  2. Financial Health: Are PGIL’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 September 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.