Today I will examine Profile Systems & Software AE.’s (ATSE:PROF) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of PROF’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.See our latest analysis for Profile Systems & Software A.E
How Did PROF’s Recent Performance Stack Up Against Its Past?
I look at the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to examine various companies on a similar basis, using new information. For Profile Systems & Software A.E, its most recent bottom-line (trailing twelve month) is €473.52K, which, in comparison to last year’s figure, has fallen by -26.93%. Given that these figures are somewhat short-term thinking, I’ve estimated an annualized five-year figure for PROF’s net income, which stands at €580.97K This doesn’t look much better, as earnings seem to have gradually been falling over time.
What could be happening here? Well, let’s look at what’s transpiring with margins and if the entire industry is feeling the heat. In the last couple of years, revenue growth has fallen behind earnings, which suggests that Profile Systems & Software A.E’s bottom line has been propelled by unsustainable cost-cutting. Inspecting growth from a sector-level, the GR software industry has been enduring some headwinds in the past twelve months, leading to an average earnings drop of -5.95%. This is a significant change, given that the industry has constantly been delivering a a notable growth of 18.48% in the last five years. This suggests that any recent headwind the industry is enduring, it’s hitting Profile Systems & Software A.E harder than its peers.
What does this mean?
Though Profile Systems & Software A.E’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that experience an extended period of diminishing earnings are undergoing some sort of reinvestment phase Although, if the whole industry is struggling to grow over time, it may be a indicator of a structural change, which makes Profile Systems & Software A.E and its peers a higher risk investment. I recommend you continue to research Profile Systems & Software A.E to get a better picture of the stock by looking at:
- 1. Financial Health: Is PROF’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.
- 2. 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 2017. This may not be consistent with full year annual report figures.
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