When Sterlite Technologies Limited (NSEI:STRTECH) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Sterlite Technologies’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not STRTECH actually performed well. Below is a quick commentary on how I see STRTECH has performed. See our latest analysis for Sterlite Technologies
How Well Did STRTECH Perform?
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess many different companies in a uniform manner using the latest information. For Sterlite Technologies, its most recent bottom-line (trailing twelve month) is ₹2.86B, which compared to the prior year’s figure, has climbed up by a substantial 50.48%. Since these values are relatively myopic, I’ve determined an annualized five-year figure for STRTECH’s earnings, which stands at ₹1.11B This means on average, Sterlite Technologies has been able to steadily improve its net income over the last couple of years as well.What’s enabled this growth? Let’s take a look at if it is solely attributable to an industry uplift, or if Sterlite Technologies has seen some company-specific growth. Over the last few years, Sterlite Technologies increased its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Eyeballing growth from a sector-level, the IN communications industry has been growing its average earnings by double-digit 13.29% in the previous year, and 24.71% over the past five. This means that whatever uplift the industry is deriving benefit from, Sterlite Technologies is capable of amplifying this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Sterlite Technologies has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Sterlite Technologies to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Future Outlook: What are well-informed industry analysts predicting for STRTECH’s future growth? Take a look at this free research report of analyst consensus for STRTECH’s outlook.
- 2. Financial Health: Is STRTECH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.