Does Akzo Nobel India Limited's (NSE:AKZOINDIA) Recent Track Record Look Strong?

After looking at Akzo Nobel India Limited's (NSEI:AKZOINDIA) 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. Check out our latest analysis for Akzo Nobel India

Commentary On AKZOINDIA's Past Performance

I like to use the ‘latest twelve-month’ data, 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 different companies in a uniform manner using the most relevant data points. For Akzo Nobel India, its latest earnings (trailing twelve month) is ₹2.47B, which, against the prior year's figure, has climbed up by 15.31%. Given that these figures are somewhat nearsighted, I’ve calculated an annualized five-year figure for AKZOINDIA's earnings, which stands at ₹1.97B This means generally, Akzo Nobel India has been able to increasingly raise its net income over the past couple of years as well.

What's the driver of this growth? Well, let’s take a look at if it is solely a result of industry tailwinds, or if Akzo Nobel India has seen some company-specific growth. The rise in earnings seems to be supported by a robust top-line increase outpacing its growth rate of costs. Though this brought about a margin contraction, it has made Akzo Nobel India more profitable. Looking at growth from a sector-level, the IN chemicals industry has been growing its average earnings by double-digit 20.72% over the past year, and 11.06% over the past five years. This suggests that any tailwind the industry is benefiting from, Akzo Nobel India has not been able to leverage it as much as its industry peers.

What does this mean?

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

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