After looking at TV18 Broadcast Limited’s (NSE:TV18BRDCST) latest earnings announcement (30 June 2018), 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 TV18 Broadcast’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Was TV18BRDCST’s recent earnings decline worse than the long-term trend and the industry?TV18BRDCST’s trailing twelve-month earnings (from 30 June 2018) of ₹81.30m has more than halved from ₹190.70m in the prior year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 27.51%, indicating the rate at which TV18BRDCST is growing has slowed down. What could be happening here? Let’s examine what’s transpiring with margins and whether the rest of the industry is experiencing the hit as well.
In the past couple of years, revenue growth has fallen behind which implies that TV18 Broadcast’s bottom line has been propelled by unmaintainable cost-cutting. Looking at growth from a sector-level, the IN media industry has been growing its average earnings by double-digit 13.79% in the prior year, and 16.51% over the past five years. This growth is a median of profitable companies of 23 Media companies in IN including Pooja Entertainment and Films, BGIL Films & Technologies and Pentamedia Graphics. This means any tailwind the industry is deriving benefit from, TV18 Broadcast has not been able to realize the gains unlike its industry peers.In terms of returns from investment, TV18 Broadcast has not invested its equity funds well, leading to a 0.38% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 0.41% is below the IN Media industry of 7.19%, indicating TV18 Broadcast’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for TV18 Broadcast’s debt level, has declined over the past 3 years from 5.86% to 1.56%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 16.72% to 25.38% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Typically companies that face a prolonged period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry expansion and disruption. I recommend you continue to research TV18 Broadcast to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TV18BRDCST’s future growth? Take a look at our free research report of analyst consensus for TV18BRDCST’s outlook.
- Financial Health: Is TV18BRDCST’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.
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 firstname.lastname@example.org.