Does Sheela Foam Limited’s (NSE:SFL) Past Performance Indicate A Stronger Future?
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Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Sheela Foam Limited’s (NSE:SFL) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for Sheela Foam
How SFL fared against its long-term earnings performance and its industry
SFL’s trailing twelve-month earnings (from 31 December 2018) of ₹1.3b has increased by 8.9% 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 20%, indicating the rate at which SFL 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 feeling the heat.
In terms of returns from investment, Sheela Foam has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 12% exceeds the IN Consumer Durables industry of 7.0%, indicating Sheela Foam has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Sheela Foam’s debt level, has declined over the past 3 years from 34% to 23%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Sheela Foam 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 Sheela Foam to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SFL’s future growth? Take a look at our free research report of analyst consensus for SFL’s outlook.
Financial Health: Are SFL’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 December 2018. 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.
