Has Chennai Petroleum Corporation Limited (NSE:CHENNPETRO) Improved Earnings Growth In Recent Times?

After reading Chennai Petroleum Corporation Limited's (NSEI:CHENNPETRO) most recent earnings announcement (31 March 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 Chennai Petroleum's performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Chennai Petroleum

Did CHENNPETRO beat its long-term earnings growth trend and its industry?

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to examine various companies in a uniform manner using the latest information. For Chennai Petroleum, its most recent earnings (trailing twelve month) is ₹10.51B, which, in comparison to last year’s level, has increased by 45.95%. Since these values are somewhat short-term, I’ve computed an annualized five-year figure for Chennai Petroleum's net income, which stands at -₹1.21B This shows that, generally, Chennai Petroleum has been able to gradually improve its bottom line over the past couple of years as well.

What's enabled this growth? Well, let’s take a look at if it is merely owing to an industry uplift, or if Chennai Petroleum has seen some company-specific growth. In the last couple of years, Chennai Petroleum increased bottom-line, while its top-line declined, by successfully controlling its costs. This brought about to a margin expansion and profitability over time. Viewing growth from a sector-level, the IN oil and gas industry has been growing its average earnings by double-digit 45.95% in the past year, and a less exciting 5.03% over the past five.

What does this mean?

Though Chennai Petroleum's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Chennai Petroleum gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Chennai Petroleum to get a better picture of the stock by looking at:

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