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Did Aarvi Encon Limited's (NSE:AARVI) Recent Earnings Growth Beat The Trend?

Simply Wall St

For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Aarvi Encon Limited (NSE:AARVI) useful as an attempt to give more color around how Aarvi Encon is currently performing.

See our latest analysis for Aarvi Encon

Did AARVI beat its long-term earnings growth trend and its industry?

AARVI's trailing twelve-month earnings (from 31 March 2019) of ₹91m has jumped 17% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 15%, indicating the rate at which AARVI is growing has accelerated. What's enabled this growth? Let's see whether it is merely attributable to industry tailwinds, or if Aarvi Encon has experienced some company-specific growth.

NSEI:AARVI Income Statement, August 18th 2019

In terms of returns from investment, Aarvi Encon has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 9.1% exceeds the IN Professional Services industry of 6.6%, indicating Aarvi Encon has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Aarvi Encon’s debt level, has increased over the past 3 years from 14% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 47% to 10% over the past 5 years.

What does this mean?

Though Aarvi Encon's past data is helpful, it is only one aspect of my investment thesis. While Aarvi Encon has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Aarvi Encon to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for AARVI’s future growth? Take a look at our free research report of analyst consensus for AARVI’s outlook.
  2. Financial Health: Are AARVI’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.
  3. 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.