Does Ind-Swift Limited's (NSE:INDSWFTLTD) -74.28% Earnings Drop Reflect A Longer Term Trend?

Understanding Ind-Swift Limited's (NSEI:INDSWFTLTD) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Ind-Swift is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period. See our latest analysis for Ind-Swift

Despite a decline, did INDSWFTLTD underperform the long-term trend and the industry?

For the most up-to-date info, I 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 method enables me to analyze various companies on a similar basis, using new information. For Ind-Swift, its latest trailing-twelve-month earnings is -₹3.72B, which, in comparison to last year’s figure, has become more negative. Given that these figures may be somewhat short-term thinking, I have determined an annualized five-year figure for Ind-Swift's earnings, which stands at -₹1.28B. This doesn't look much better, as earnings seem to have consistently been getting more and more negative over time.

We can further evaluate Ind-Swift's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Ind-Swift has seen an annual decline in revenue of -28.10%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the IN pharmaceuticals industry has been growing, albeit, at a muted single-digit rate of 6.32% in the prior twelve months, and a substantial 14.03% over the past five. This suggests that whatever uplift the industry is deriving benefit from, Ind-Swift has not been able to gain as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Ind-Swift may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Ind-Swift to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is INDSWFTLTD’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 INDSWFTLTD 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 INDSWFTLTD 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.