After reading BSE Limited’s (NSEI:BSE) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether BSE’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for BSE
Did BSE beat its long-term earnings growth trend and its industry?
I prefer to use the ‘latest twelve-month’ data, 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 allows me to analyze many different companies in a uniform manner using new information. For BSE, its most recent bottom-line (trailing twelve month) is ₹2.85B, which, relative to the prior year’s figure, has risen by a substantial 76.70%. Since these figures are fairly short-term, I have determined an annualized five-year value for BSE’s earnings, which stands at ₹1.61B This means generally, BSE has been able to steadily improve its earnings over the past few years as well.What’s enabled this growth? Let’s take a look at if it is solely because of an industry uplift, or if BSE has seen some company-specific growth. The ascend in earnings seems to be driven by a solid top-line increase outstripping its growth rate of expenses. Though this brought about a margin contraction, it has made BSE more profitable. Eyeballing growth from a sector-level, the IN capital markets industry has been growing its average earnings by double-digit 31.69% over the prior year, and 13.84% over the past five years. This suggests that whatever uplift the industry is profiting from, BSE is capable of amplifying this to its advantage.
What does this mean?
Though BSE’s past data is helpful, it is only one aspect of my investment thesis. While BSE has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research BSE to get a better picture 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 BSE’s future growth? Take a look at this free research report of analyst consensus for BSE’s outlook.
- 2. Financial Health: Is BSE’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.