For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Eros International Media Limited (NSEI:EROSMEDIA) useful as an attempt to give more color around how Eros International Media is currently performing. View our latest analysis for Eros International Media
Were EROSMEDIA’s earnings stronger than its past performances and the industry?
I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to examine different stocks in a uniform manner using new information. For Eros International Media, the most recent earnings is ₹2,391.0M, which, relative to the prior year’s level, has risen by 26.35%. Given that these values are somewhat nearsighted, I’ve created an annualized five-year figure for EROSMEDIA’s net income, which stands at ₹1,938.7M. This means generally, Eros International Media has been able to gradually improve its earnings over the past few years as well.
How has it been able to do this? Well, let’s take a look at if it is merely due to industry tailwinds, or if Eros International Media has experienced some company-specific growth. Over the last couple of years, Eros International Media expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the IN media industry has been growing, albeit, at a subdued single-digit rate of 3.81% in the previous twelve months, and a substantial 14.55% over the past five years. This means that any recent headwind the industry is experiencing, Eros International Media is relatively better-cushioned than its peers.
What does this mean?
Eros International Media’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Eros International Media has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Eros International Media to get a more holistic view of the stock by looking at:
1. Financial Health: Is EROSMEDIA’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.