HCL Technologies Profitability Analysis

HCLTECH Stock   1,898  6.90  0.36%   
Based on HCL Technologies' profitability indicators, HCL Technologies Limited may not be well positioned to generate adequate gross income at this time. It has a very high probability of underperforming in January. Profitability indicators assess HCL Technologies' ability to earn profits and add value for shareholders.
 
Net Income  
First Reported
2013-03-31
Previous Quarter
42.6 B
Current Value
42.4 B
Quarterly Volatility
9.2 B
 
Yuan Drop
 
Covid
For HCL Technologies profitability analysis, we use financial ratios and fundamental drivers that measure the ability of HCL Technologies to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well HCL Technologies Limited utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between HCL Technologies's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of HCL Technologies Limited over time as well as its relative position and ranking within its peers.
  
Check out Risk vs Return Analysis.
Please note, there is a significant difference between HCL Technologies' value and its price as these two are different measures arrived at by different means. Investors typically determine if HCL Technologies is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, HCL Technologies' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

HCL Technologies Return On Asset vs. Return On Equity Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining HCL Technologies's current stock value. Our valuation model uses many indicators to compare HCL Technologies value to that of its competitors to determine the firm's financial worth.
HCL Technologies Limited is one of the top stocks in return on equity category among its peers. It also is one of the top stocks in return on asset category among its peers reporting about  0.54  of Return On Asset per Return On Equity. The ratio of Return On Equity to Return On Asset for HCL Technologies Limited is roughly  1.85 . Comparative valuation analysis is a catch-all model that can be used if you cannot value HCL Technologies by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for HCL Technologies' Stock. Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued.

HCL Return On Asset vs. Return On Equity

Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.

HCL Technologies

Return On Equity

 = 

Net Income

Total Equity

 = 
0.25
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.
Return on Asset or ROA shows how effective is the management of the company in generating income from utilizing all of the assets at their disposal. It is a useful ratio to evaluate the performance of different departments of a company as well as to understand management performance over time.

HCL Technologies

Return On Asset

 = 

Net Income

Total Assets

 = 
0.13
Return on Asset measures overall efficiency of a company in generating profits from its total assets. It is expressed as the percentage of profits earned per dollar of Asset. A low ROA typically means that a company is asset-intensive and therefore will needs more money to continue generating revenue in the future.

HCL Return On Asset Comparison

HCL Technologies is currently under evaluation in return on asset category among its peers.

HCL Technologies Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in HCL Technologies, profitability is also one of the essential criteria for including it into their portfolios because, without profit, HCL Technologies will eventually generate negative long term returns. The profitability progress is the general direction of HCL Technologies' change in net profit over the period of time. It can combine multiple indicators of HCL Technologies, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for Next Year
Accumulated Other Comprehensive Income120 B126 B
Operating Income201.5 B211.6 B
Income Before Tax209.7 B220.2 B
Total Other Income Expense Net8.2 B8.6 B
Net Income158 B165.9 B
Income Tax Expense52.6 B55.2 B
Net Income From Continuing Ops157.1 B165 B
Net Income Applicable To Common Shares170.8 B179.3 B
Net Interest Income-5.5 B-5.3 B
Interest Income4.1 B4.3 B
Change To Netincome43.7 M45.9 M

HCL Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on HCL Technologies. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of HCL Technologies position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the HCL Technologies' important profitability drivers and their relationship over time.

Use HCL Technologies in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if HCL Technologies position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HCL Technologies will appreciate offsetting losses from the drop in the long position's value.

HCL Technologies Pair Trading

HCL Technologies Limited Pair Trading Analysis

The ability to find closely correlated positions to HCL Technologies could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace HCL Technologies when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back HCL Technologies - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling HCL Technologies Limited to buy it.
The correlation of HCL Technologies is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as HCL Technologies moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if HCL Technologies moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for HCL Technologies can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

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Other Information on Investing in HCL Stock

To fully project HCL Technologies' future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of HCL Technologies at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include HCL Technologies' income statement, its balance sheet, and the statement of cash flows.
Potential HCL Technologies investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although HCL Technologies investors may work on each financial statement separately, they are all related. The changes in HCL Technologies's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on HCL Technologies's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.