Does Creative Peripherals and Distribution Limited’s (NSE:CREATIVE) 18.88% Earnings Growth Reflect The Long-Term Trend?

When Creative Peripherals and Distribution Limited (NSEI:CREATIVE) released its most recent earnings update (31 March 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Creative Peripherals and Distribution performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see CREATIVE has performed. View our latest analysis for Creative Peripherals and Distribution

How Well Did CREATIVE Perform?

I look at 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 examine many different companies on a more comparable basis, using the most relevant data points. For Creative Peripherals and Distribution, its latest earnings (trailing twelve month) is ₹13.40M, which compared to the prior year’s level, has increased by 18.88%. Since these values may be somewhat short-term, I’ve estimated an annualized five-year figure for Creative Peripherals and Distribution’s earnings, which stands at ₹10.42M This means that, generally, Creative Peripherals and Distribution has been able to gradually grow its bottom line over the last couple of years as well.

NSEI:CREATIVE Income Statement Apr 20th 18
NSEI:CREATIVE Income Statement Apr 20th 18
What’s enabled this growth? Let’s take a look at if it is merely due to industry tailwinds, or if Creative Peripherals and Distribution has experienced some company-specific growth. The ascend in earnings seems to be bolstered by a robust top-line increase outpacing its growth rate of expenses. Though this has caused a margin contraction, it has made Creative Peripherals and Distribution more profitable. Viewing growth from a sector-level, the IN electronic industry has been relatively flat in terms of earnings growth over the past twelve months, settling down from a solid 10.91% over the past five. This suggests that any recent headwind the industry is enduring, Creative Peripherals and Distribution is relatively better-cushioned than its peers.

What does this mean?

Creative Peripherals and Distribution’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Creative Peripherals and Distribution has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Creative Peripherals and Distribution to get a more holistic view of the stock by looking at:

  1. Financial Health: Is CREATIVE’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. 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.