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.

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.