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Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Cambridge Technology Enterprises Limited's (NSE:CTE) 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.
Did CTE's recent earnings growth beat the long-term trend and the industry?
CTE's trailing twelve-month earnings (from 31 March 2019) of ₹188m has jumped 46% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 38%, indicating the rate at which CTE is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only attributable to industry tailwinds, or if Cambridge Technology Enterprises has seen some company-specific growth.
In terms of returns from investment, Cambridge Technology Enterprises has invested its equity funds well leading to a 31% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the IN IT industry of 8.9%, indicating Cambridge Technology Enterprises has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cambridge Technology Enterprises’s debt level, has increased over the past 3 years from 16% to 31%.
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 Cambridge Technology Enterprises gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Cambridge Technology Enterprises to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CTE’s future growth? Take a look at our free research report of analyst consensus for CTE’s outlook.
- Financial Health: Are CTE’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 firstname.lastname@example.org. 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.