Today I will examine Lokesh Machines Limited's (NSE:LOKESHMACH) latest earnings update (31 March 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of LOKESHMACH's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Commentary On LOKESHMACH's Past Performance
LOKESHMACH's trailing twelve-month earnings (from 31 March 2019) of ₹68m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 41%, indicating the rate at which LOKESHMACH is growing has accelerated. What's the driver of this growth? Let's take a look at if it is solely a result of an industry uplift, or if Lokesh Machines has experienced some company-specific growth.
In terms of returns from investment, Lokesh Machines has fallen short of achieving a 20% return on equity (ROE), recording 4.7% instead. Furthermore, its return on assets (ROA) of 6.8% is below the IN Machinery industry of 7.1%, indicating Lokesh Machines's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Lokesh Machines’s debt level, has increased over the past 3 years from 11% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 127% to 52% over the past 5 years.
What does this mean?
Though Lokesh Machines's past data is helpful, it is only one aspect of my investment thesis. While Lokesh Machines has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Lokesh Machines to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LOKESHMACH’s future growth? Take a look at our free research report of analyst consensus for LOKESHMACH’s outlook.
- Financial Health: Are LOKESHMACH’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.
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