Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Digia Oyj’s (HEL:DIGIA) 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.
Despite a decline, did DIGIA underperform the long-term trend and the industry?
DIGIA’s trailing twelve-month earnings (from 30 June 2018) of €3m has declined by -5.6% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 25%, indicating the rate at which DIGIA is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Digia Oyj has fallen short of achieving a 20% return on equity (ROE), recording 5.7% instead. Furthermore, its return on assets (ROA) of 3.5% is below the FI IT industry of 5.9%, indicating Digia Oyj’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Digia Oyj’s debt level, has declined over the past 3 years from 9.2% to 6.1%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Digia Oyj to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DIGIA’s future growth? Take a look at our free research report of analyst consensus for DIGIA’s outlook.
- Financial Health: Are DIGIA’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 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 email@example.com.