Understanding EIH Associated Hotels Limited's (NSE:EIHAHOTELS) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how EIH Associated Hotels is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Did EIHAHOTELS beat its long-term earnings growth trend and its industry?
EIHAHOTELS's trailing twelve-month earnings (from 30 June 2019) of ₹378m has increased by 6.1% 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 9.2%, indicating the rate at which EIHAHOTELS is growing has slowed down. To understand what's happening, let's examine what's occurring with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, EIH Associated Hotels has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 8.4% exceeds the IN Hospitality industry of 6.4%, indicating EIH Associated Hotels has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for EIH Associated Hotels’s debt level, has declined over the past 3 years from 23% to 15%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research EIH Associated Hotels to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EIHAHOTELS’s future growth? Take a look at our free research report of analyst consensus for EIHAHOTELS’s outlook.
- Financial Health: Are EIHAHOTELS’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 June 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.