Petronet LNG Limited (NSE:PETRONET): Has Recent Earnings Growth Beaten Long-Term Trend?
When Petronet LNG Limited (NSEI:PETRONET) announced its most recent earnings (31 March 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Petronet LNG has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see PETRONET has performed. See our latest analysis for Petronet LNG
How PETRONET fared against its long-term earnings performance and its industry
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess various companies on a similar basis, using the latest information. For Petronet LNG, its latest trailing-twelve-month earnings is IN₨17.23B, which, in comparison to the prior year’s level, has climbed up by a substantial 85.71%. Given that these figures may be somewhat short-term thinking, I’ve computed an annualized five-year figure for PETRONET’s net income, which stands at IN₨9.55B This suggests that, generally, Petronet LNG has been able to steadily improve its profits over the past couple of years as well.
What’s enabled this growth? Well, let’s take a look at whether it is solely a result of an industry uplift, or if Petronet LNG has experienced some company-specific growth. The ascend in earnings seems to be driven by a solid top-line increase beating its growth rate of expenses. Though this resulted in a margin contraction, it has made Petronet LNG more profitable. Inspecting growth from a sector-level, the IN oil and gas industry has been growing its average earnings by double-digit 47.93% over the previous year, and a more muted 3.99% over the previous five years. This shows that whatever uplift the industry is enjoying, Petronet LNG is able to leverage this to its advantage.
What does this mean?
Petronet LNG’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Petronet LNG gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Petronet LNG to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PETRONET’s future growth? Take a look at our free research report of analyst consensus for PETRONET’s outlook.
2. Financial Health: Is PETRONET’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.
