Examining NIIT Limited’s (NSE:NIITLTD) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess NIITLTD’s latest performance announced on 31 December 2018 and compare these figures to its longer term trend and industry movements.
Could NIITLTD beat the long-term trend and outperform its industry?
NIITLTD’s trailing twelve-month earnings (from 31 December 2018) of ₹829m has jumped 14% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 41%, indicating the rate at which NIITLTD is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, NIIT has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 6.6% is below the IN IT industry of 7.1%, indicating NIIT’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for NIIT’s debt level, has increased over the past 3 years from 0.3% to 3.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 20% to 18% over the past 5 years.
What does this mean?
Though NIIT’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as NIIT gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research NIIT to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NIITLTD’s future growth? Take a look at our free research report of analyst consensus for NIITLTD’s outlook.
- Financial Health: Are NIITLTD’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 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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