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Does Alicon Castalloy Limited's (NSE:ALICON) Past Performance Indicate A Weaker Future?

Simply Wall St

Assessing Alicon Castalloy Limited's (NSEI:ALICON) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how Alicon Castalloy is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its auto components industry peers.

View our latest analysis for Alicon Castalloy

Was ALICON's recent earnings decline worse than the long-term trend and the industry?

ALICON's trailing twelve-month earnings (from 30 September 2019) of ₹413m has declined by -16% 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 23%, indicating the rate at which ALICON is growing has slowed down. Why is this? Well, let's look at what's occurring with margins and if the rest of the industry is experiencing the hit as well.

NSEI:ALICON Income Statement, October 27th 2019

In terms of returns from investment, Alicon Castalloy has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 8.8% exceeds the IN Auto Components industry of 7.6%, indicating Alicon Castalloy has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Alicon Castalloy’s debt level, has declined over the past 3 years from 27% to 23%.

What does this mean?

Though Alicon Castalloy's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I recommend you continue to research Alicon Castalloy to get a more holistic view of the stock by looking at:

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