Does LML Limited’s (NSE:LML) Past Performance Indicate A Weaker Future?
Examining LML Limited’s (NSEI:LML) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess LML’s latest performance announced on 31 March 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for LML
Was LML’s recent earnings decline indicative of a tough track record?
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to analyze different stocks on a similar basis, using new information. For LML, the most recent bottom-line -₹906.9M, which, against the previous year’s level, has become more negative. Since these values are fairly myopic, I have computed an annualized five-year value for LML’s earnings, which stands at -₹730.6M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further assess LML’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative at -12.13%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing growth from a sector-level, the IN auto industry has been relatively flat in terms of earnings growth over the past few years. This suggests that whatever recent headwind the industry is enduring, it’s hitting LML harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues LML may be facing and whether management guidance has dependably been met in the past. You should continue to research LML to get a better picture of the stock by looking at:
1. Financial Health: Is LML’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
