Shree Renuka Sugars Limited (NSE:RENUKA): Has Recent Earnings Growth Beaten Long-Term Trend?
After reading Shree Renuka Sugars Limited’s (NSEI:RENUKA) most recent earnings announcement (31 March 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Shree Renuka Sugars’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Shree Renuka Sugars
Commentary On RENUKA’s Past Performance
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to analyze different stocks on a similar basis, using the most relevant data points. For Shree Renuka Sugars, its latest earnings (trailing twelve month) is -₹10.40B, which compared to last year’s figure, has become less negative. Given that these values may be somewhat short-term, I’ve calculated an annualized five-year figure for RENUKA’s net income, which stands at -₹7.28B. This means Shree Renuka Sugars has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
We can further examine Shree Renuka Sugars’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Shree Renuka Sugars’s top-line has increased by a mere 5.14%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the IN food industry has been growing its average earnings by double-digit 22.25% in the prior year, and 15.46% over the past half a decade. This means though Shree Renuka Sugars is presently loss-making, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
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 happen in the future and when. The most valuable step is to examine company-specific issues Shree Renuka Sugars may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Shree Renuka Sugars to get a better picture of the stock by looking at:
1. Financial Health: Is RENUKA’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 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.
