Did Blue Star Limited's (NSE:BLUESTARCO) Recent Earnings Growth Beat The Trend?

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In this article, I will take a look at Blue Star Limited's (NSE:BLUESTARCO) most recent earnings update (31 March 2019) and compare these latest figures against its performance over the past few years, along with how the rest of BLUESTARCO's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.

Check out our latest analysis for Blue Star

How Well Did BLUESTARCO Perform?

BLUESTARCO's trailing twelve-month earnings (from 31 March 2019) of ₹1.9b has jumped 27% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 23%, indicating the rate at which BLUESTARCO is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only because of industry tailwinds, or if Blue Star has experienced some company-specific growth.

NSEI:BLUESTARCO Income Statement, May 29th 2019
NSEI:BLUESTARCO Income Statement, May 29th 2019

In terms of returns from investment, Blue Star has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.1% exceeds the IN Building industry of 6.3%, indicating Blue Star has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Blue Star’s debt level, has increased over the past 3 years from 22% to 33%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 103% to 39% over the past 5 years.

What does this mean?

Blue Star's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Blue Star to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BLUESTARCO’s future growth? Take a look at our free research report of analyst consensus for BLUESTARCO’s outlook.

  2. Financial Health: Are BLUESTARCO’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.

  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 2019. 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.