Does Automotive Axles Limited's (NSE:AUTOAXLES) 45% Earnings Growth Make It An Outperformer?
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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Automotive Axles Limited's (NSE:AUTOAXLES) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
See our latest analysis for Automotive Axles
How Well Did AUTOAXLES Perform?
AUTOAXLES's trailing twelve-month earnings (from 31 March 2019) of ₹1.2b has jumped 45% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 42%, indicating the rate at which AUTOAXLES is growing has accelerated. How has it been able to do this? Let's see if it is solely a result of an industry uplift, or if Automotive Axles has experienced some company-specific growth.
In terms of returns from investment, Automotive Axles has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the IN Auto Components industry of 7.9%, indicating Automotive Axles has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Automotive Axles’s debt level, has increased over the past 3 years from 17% to 30%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 20% to 12% over the past 5 years.
What does this mean?
Though Automotive Axles's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Automotive Axles gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Automotive Axles to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AUTOAXLES’s future growth? Take a look at our free research report of analyst consensus for AUTOAXLES’s outlook.
Financial Health: Are AUTOAXLES’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 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.
