In this commentary, I will examine Thyrocare Technologies Limited’s (NSE:THYROCARE) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the healthcare industry performed. As an investor, I find it beneficial to assess THYROCARE’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Thyrocare Technologies
Did THYROCARE’s recent earnings growth beat the long-term trend and the industry?THYROCARE’s trailing twelve-month earnings (from 31 March 2018) of ₹932.75m has jumped 31.44% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 14.36%, indicating the rate at which THYROCARE is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is only a result of industry tailwinds, or if Thyrocare Technologies has seen some company-specific growth.
The hike in earnings seems to be propelled by a solid top-line increase overtaking its growth rate of expenses. Though this resulted in a margin contraction, it has made Thyrocare Technologies more profitable. Viewing growth from a sector-level, the IN healthcare industry has been growing, albeit, at a unexciting single-digit rate of 8.71% in the past twelve months, and a substantial 18.78% over the previous five years. This growth is a median of profitable companies of 25 Healthcare companies in IN including Sang Froid Labs (India), Kids Medical Systems and Apollo Hospitals Enterprise. This means that any uplift the industry is enjoying, Thyrocare Technologies is able to leverage this to its advantage.In terms of returns from investment, Thyrocare Technologies has invested its equity funds well leading to a 21.04% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19.56% exceeds the IN Healthcare industry of 6.06%, indicating Thyrocare Technologies has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Thyrocare Technologies’s debt level, has increased over the past 3 years from 20.87% to 30.35%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 15.60% to 2.40% over the past 5 years.
What does this mean?
Though Thyrocare Technologies’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Thyrocare Technologies gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Thyrocare Technologies to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for THYROCARE’s future growth? Take a look at our free research report of analyst consensus for THYROCARE’s outlook.
- Financial Health: Is THYROCARE’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.
- 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.