Does Bharat Petroleum Corporation Limited's (NSE:BPCL) 15% Earnings Growth Make It An Outperformer?

After looking at Bharat Petroleum Corporation Limited's (NSEI:BPCL) latest earnings announcement (31 March 2017), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. 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 a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Bharat Petroleum

How BPCL fared against its long-term earnings performance and its industry

I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to examine various companies in a uniform manner using the latest information. "For Bharat Petroleum, its ", most recent twelve-month earnings is ₹87,209.4M, which, in comparison to the previous year's figure, has jumped up by 14.98%. Since these figures are fairly myopic, I have created an annualized five-year figure for Bharat Petroleum's earnings, which stands at ₹41,884.7M. This means that, generally, Bharat Petroleum has been able to consistently grow its profits over the last couple of years as well.

What's the driver of this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if Bharat Petroleum has experienced some company-specific growth. In the last few years, Bharat Petroleum expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Inspecting growth from a sector-level, the IN oil and gas industry has been growing its average earnings by double-digit 45.95% over the previous twelve months, and a less exciting 5.53% over the past couple of years. This suggests that whatever tailwind the industry is profiting from, Bharat Petroleum has not been able to gain as much as its average peer.

What does this mean?

Though Bharat Petroleum's past data is helpful, it is only one aspect of my investment thesis. While Bharat Petroleum 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 Bharat Petroleum to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for BPCL’s future growth? Take a look at our free research report of analyst consensus for BPCL’s outlook.

2. Financial Health: Is BPCL’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.