Was Savita Oil Technologies Limited's (NSE:SOTL) Earnings Decline Part Of A Broader Industry Downturn?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Measuring Savita Oil Technologies Limited's (NSE:SOTL) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess SOTL's recent performance announced on 31 March 2019 and compare these figures to its historical trend and industry movements.
See our latest analysis for Savita Oil Technologies
Was SOTL's recent earnings decline worse than the long-term trend and the industry?
SOTL's trailing twelve-month earnings (from 31 March 2019) of ₹1.1b has declined by -9.5% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 26%, indicating the rate at which SOTL is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, Savita Oil Technologies has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 10% exceeds the IN Chemicals industry of 9.2%, indicating Savita Oil Technologies has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Savita Oil Technologies’s debt level, has increased over the past 3 years from 11% to 20%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 17% to 0.3% over the past 5 years.
What does this mean?
Though Savita Oil Technologies's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Savita Oil Technologies to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SOTL’s future growth? Take a look at our free research report of analyst consensus for SOTL’s outlook.
Financial Health: Are SOTL’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.
