How Does The Grob Tea Company Limited's (NSE:GROBTEA) Earnings Growth Stack Up Against Industry Performance?
Assessing The Grob Tea Company Limited's (NSE:GROBTEA) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess GROBTEA's latest performance announced on 30 June 2019 and evaluate these figures to its historical trend and industry movements.
See our latest analysis for Grob Tea
Did GROBTEA beat its long-term earnings growth trend and its industry?
GROBTEA's trailing twelve-month earnings (from 30 June 2019) of ₹28m has jumped 47% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -9.7%, indicating the rate at which GROBTEA is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is only due to an industry uplift, or if Grob Tea has experienced some company-specific growth.
In terms of returns from investment, Grob Tea has fallen short of achieving a 20% return on equity (ROE), recording 6.5% instead. Furthermore, its return on assets (ROA) of 4.3% is below the IN Food industry of 6.8%, indicating Grob Tea's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Grob Tea’s debt level, has declined over the past 3 years from 15% to 7.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 8.5% to 15% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There could be factors that are impacting the industry as a whole, hence the high industry growth rate over the same time period. I suggest you continue to research Grob Tea to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for GROBTEA’s future growth? Take a look at our free research report of analyst consensus for GROBTEA’s outlook.
Financial Health: Are GROBTEA’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 30 June 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.
