Does Prolife Industries Limited's (NSE:PROLIFE) Past Performance Indicate A Stronger Future?

After looking at Prolife Industries Limited's (NSEI:PROLIFE) 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 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 Prolife Industries's performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Prolife Industries

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

I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to assess different companies on a more comparable basis, using the most relevant data points. For Prolife Industries, its most recent bottom-line (trailing twelve month) is ₹8.74M, which, relative to the previous year's level, has increased by a non-trivial 66.44%. Given that these figures may be somewhat short-term thinking, I have calculated an annualized five-year value for PROLIFE's net income, which stands at ₹4.04M This means that, generally, Prolife Industries has been able to gradually grow its profits over the past couple of years as well.

What's enabled this growth? Let's see whether it is only due to an industry uplift, or if Prolife Industries has seen some company-specific growth. In the last few years, Prolife Industries increased its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the IN chemicals industry has been growing its average earnings by double-digit 20.31% over the previous year, and a more muted 9.76% over the past five. This suggests that whatever tailwind the industry is deriving benefit from, Prolife Industries is able to leverage this to its advantage.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Prolife Industries gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Prolife Industries to get a better picture of the stock by looking at:

• 1. Financial Health: Is PROLIFE’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.
• 2. Valuation: What is PROLIFE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PROLIFE is currently mispriced by the market.
• 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.