Recently turned profitable, explained

What is Recently turned profitable?

Yes if the company made a loss two years ago and a profit now.

A loss of ₹120 Cr two years ago and a profit of ₹60 Cr now is a Yes. The next question is whether the profit came from operations or a one-off sale.

Turnarounds can re-rate a stock quickly.

Check that the profit comes from the business, not a one-off gain.

A fact about the company, not a score.

Turnarounds, buybacks, demergers and where the price sits in its yearly range.

9 lessons

Today's price as a percentage of the lowest price in the last year. 150% means 50% above the low.

The same test as Recently turned profitable: a loss two years ago, a profit now.

Today's price as a percentage of the highest price in the last year. 80% means 20% below the high.

Yes if 3-year sales growth is more than twice the 5-year rate: growth has recently sped up.

How much net margin changed over 3 years, in percentage points.

Yes if the company split off a business into a separate listed company in the last two years.

Yes if the company bought back its own shares in the last 6 months.

Where the company is in its life: young growth, high growth, mature growth, mature stable or decline.