Understanding Kellton Tech Solutions Limited’s (NSE:KELLTONTEC) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Kellton Tech Solutions is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.
Did KELLTONTEC’s recent earnings growth beat the long-term trend and the industry?
KELLTONTEC’s trailing twelve-month earnings (from 30 June 2019) of ₹762m has increased by 3.6% 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 32%, indicating the rate at which KELLTONTEC is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Kellton Tech Solutions has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the IN IT industry of 9.4%, indicating Kellton Tech Solutions has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Kellton Tech Solutions’s debt level, has declined over the past 3 years from 41% to 27%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Kellton Tech Solutions has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Kellton Tech Solutions to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KELLTONTEC’s future growth? Take a look at our free research report of analyst consensus for KELLTONTEC’s outlook.
- Financial Health: Are KELLTONTEC’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 30 June 2019. 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 email@example.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.
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