After reading Rajshree Polypack Limited's (NSE:RPPL) most recent earnings announcement (31 March 2019), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
How Well Did RPPL Perform?
RPPL's trailing twelve-month earnings (from 31 March 2019) of ₹105m has increased by 10.0% 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 37%, indicating the rate at which RPPL is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Rajshree Polypack has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 10% exceeds the IN Packaging industry of 8.5%, indicating Rajshree Polypack has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Rajshree Polypack’s debt level, has declined over the past 3 years from 29% to 13%.
What does this mean?
Rajshree Polypack's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Rajshree Polypack has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Rajshree Polypack to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RPPL’s future growth? Take a look at our free research report of analyst consensus for RPPL’s outlook.
- Financial Health: Are RPPL’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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