For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Colgate-Palmolive (India) Limited’s (NSE:COLPAL) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Did COLPAL’s recent earnings growth beat the long-term trend and the industry?
COLPAL’s trailing twelve-month earnings (from 30 September 2018) of ₹7.5b has jumped 28% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.2%, indicating the rate at which COLPAL is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is solely owing to industry tailwinds, or if Colgate-Palmolive (India) has seen some company-specific growth.
In terms of returns from investment, Colgate-Palmolive (India) has invested its equity funds well leading to a 48% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 29% exceeds the IN Personal Products industry of 15%, indicating Colgate-Palmolive (India) has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Colgate-Palmolive (India)’s debt level, has declined over the past 3 years from 73% to 65%.
What does this mean?
Colgate-Palmolive (India)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Colgate-Palmolive (India) has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Colgate-Palmolive (India) to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for COLPAL’s future growth? Take a look at our free research report of analyst consensus for COLPAL’s outlook.
- Financial Health: Are COLPAL’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.
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 email@example.com.