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For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Vesuvius India Limited's (NSE:VESUVIUS) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Despite a decline, did VESUVIUS underperform the long-term trend and the industry?
VESUVIUS's trailing twelve-month earnings (from 31 March 2019) of ₹900m has declined by -5.5% 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 11%, indicating the rate at which VESUVIUS is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Vesuvius India has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 7.5% exceeds the IN Machinery industry of 7.3%, indicating Vesuvius India has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Vesuvius India’s debt level, has declined over the past 3 years from 21% to 16%.
What does this mean?
Vesuvius India's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research Vesuvius India to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for VESUVIUS’s future growth? Take a look at our free research report of analyst consensus for VESUVIUS’s outlook.
- Financial Health: Are VESUVIUS’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.