For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Multi Commodity Exchange of India Limited (NSE:MCX) useful as an attempt to give more color around how Multi Commodity Exchange of India is currently performing.
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Could MCX beat the long-term trend and outperform its industry?
MCX's trailing twelve-month earnings (from 31 March 2019) of ₹1.5b has jumped 35% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.1%, indicating the rate at which MCX is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is merely because of industry tailwinds, or if Multi Commodity Exchange of India has experienced some company-specific growth.
In terms of returns from investment, Multi Commodity Exchange of India has fallen short of achieving a 20% return on equity (ROE), recording 9.3% instead. However, its return on assets (ROA) of 7.0% exceeds the IN Capital Markets industry of 3.4%, indicating Multi Commodity Exchange of India has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Multi Commodity Exchange of India’s debt level, has declined over the past 3 years from 11% to 11%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Multi Commodity Exchange of India gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Multi Commodity Exchange of India to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MCX’s future growth? Take a look at our free research report of analyst consensus for MCX’s outlook.
- Financial Health: Are MCX’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 email@example.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.