Assessing Kewal Kiran Clothing Limited's (NSEI:KKCL) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess KKCL's recent performance announced on 30 September 2019 and evaluate these figures to its longer term trend and industry movements.
Did KKCL beat its long-term earnings growth trend and its industry?
KKCL's trailing twelve-month earnings (from 30 September 2019) of ₹785m has increased by 2.3% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 4.3%, indicating the rate at which KKCL 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 rest of the industry is facing the same headwind.
In terms of returns from investment, Kewal Kiran Clothing has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 13% exceeds the IN Luxury industry of 6.1%, indicating Kewal Kiran Clothing has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Kewal Kiran Clothing’s debt level, has declined over the past 3 years from 28% to 20%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 4.2% to 20% over the past 5 years.
What does this mean?
Though Kewal Kiran Clothing's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Kewal Kiran Clothing gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Kewal Kiran Clothing to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KKCL’s future growth? Take a look at our free research report of analyst consensus for KKCL’s outlook.
- Financial Health: Are KKCL’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 30 September 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.