Yahoo Finance How Has CreditAccess Grameen Limited’s (NSE:CREDITACC) Earnings Fared Against The Long Term Trend
Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at CreditAccess Grameen Limited’s (NSE:CREDITACC) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for CreditAccess Grameen
Were CREDITACC’s earnings stronger than its past performances and the industry?
CREDITACC’s trailing twelve-month earnings (from 31 March 2018) of ₹1.25b has jumped 55.2% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 34.8%, indicating the rate at which CREDITACC is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is only a result of industry tailwinds, or if CreditAccess Grameen has experienced some company-specific growth.
The ascend in earnings seems to be propelled by a solid top-line increase overtaking its growth rate of expenses. Though this has led to a margin contraction, it has made CreditAccess Grameen more profitable. Eyeballing growth from a sector-level, the IN consumer finance industry has been growing its average earnings by double-digit 25.9% in the past year, and a less exciting 8.9% over the past five. This growth is a median of profitable companies of 25 Consumer Finance companies in IN including Bharat Financial Inclusion, BFL Asset Finvest and Delta Leasing & Finance. This suggests that whatever uplift the industry is gaining from, CreditAccess Grameen is capable of amplifying this to its advantage.
In terms of returns from investment, CreditAccess Grameen has fallen short of achieving a 20% return on equity (ROE), recording 8.7% instead. However, its return on assets (ROA) of 2.4% exceeds the IN Consumer Finance industry of 2.2%, indicating CreditAccess Grameen has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for CreditAccess Grameen’s debt level, has declined over the past 3 years from 7.8% to 6.4%.
What does this mean?
Though CreditAccess Grameen’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research CreditAccess Grameen to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CREDITACC’s future growth? Take a look at our free research report of analyst consensus for CREDITACC’s outlook.
Financial Health: Are CREDITACC’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 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
