Was Hindustan Unilever Limited’s (NSE:HINDUNILVR) Earnings Growth Better Than The Industry’s?
In this article, I will take a look at Hindustan Unilever Limited’s (NSEI:HINDUNILVR) most recent earnings update (31 March 2017) and compare these latest figures against its performance over the past few years, along with how the rest of HINDUNILVR’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. Check out our latest analysis for Hindustan Unilever
Were HINDUNILVR’s earnings stronger than its past performances and the industry?
I prefer to use the ‘latest twelve-month’ data, 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 blend enables me to examine various companies on a more comparable basis, using new information. For Hindustan Unilever, its most recent earnings (trailing twelve month) is ₹44,880.0M, which compared to last year’s figure, has increased by a somewhat soft 8.25%. Given that these values are fairly nearsighted, I have created an annualized five-year figure for HINDUNILVR’s earnings, which stands at ₹36,940.5M. This shows that, generally, Hindustan Unilever has been able to increasingly improve its net income over the past couple of years as well.
How has it been able to do this? Well, let’s take a look at if it is only owing to industry tailwinds, or if Hindustan Unilever has experienced some company-specific growth. Over the last couple of years, Hindustan Unilever grew its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the IN industry industry has been growing its average earnings by double-digit 10.04% over the prior year, and 17.25% over the past couple of years. This means that any uplift the industry is enjoying, Hindustan Unilever has not been able to reap as much as its average peer.
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 Hindustan Unilever to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for HINDUNILVR’s future growth? Take a look at our free research report of analyst consensus for HINDUNILVR’s outlook.
2. Financial Health: Is HINDUNILVR’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 31 March 2017. 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.
