NorCom Information Technology AG (ETR:NC5A): Has Recent Earnings Growth Beaten Long-Term Trend?

In this commentary, I will examine NorCom Information Technology AG’s (XTRA:NC5A) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the it industry performed. As an investor, I find it beneficial to assess NC5A’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for NorCom Information Technology

Commentary On NC5A’s Past Performance

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to assess various companies on a more comparable basis, using new information. For NorCom Information Technology, its latest trailing-twelve-month earnings is €1.98M, which, against last year’s figure, has moved up by an impressive 74.58%. Since these values may be somewhat myopic, I’ve estimated an annualized five-year figure for NorCom Information Technology’s earnings, which stands at -€1.81M This suggests that, generally, NorCom Information Technology has been able to increasingly improve its earnings over the last few years as well.

XTRA:NC5A Income Statement Mar 26th 18
XTRA:NC5A Income Statement Mar 26th 18
How has it been able to do this? Let’s take a look at if it is solely a result of an industry uplift, or if NorCom Information Technology has experienced some company-specific growth. Over the last few years, NorCom Information Technology increased bottom-line, while its top-line declined, by efficiently controlling its costs. This brought about to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the DE it industry has been growing, albeit, at a subdued single-digit rate of 7.90% in the prior year, and a substantial 13.54% over the past half a decade. This suggests that whatever uplift the industry is benefiting from, NorCom Information Technology is able to leverage this to its advantage.

What does this mean?

Though NorCom Information Technology’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as NorCom Information Technology gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research NorCom Information Technology to get a more holistic view of the stock by looking at:

  • 1. Future Outlook: What are well-informed industry analysts predicting for NC5A’s future growth? Take a look at our free research report of analyst consensus for NC5A’s outlook.
  • 2. Financial Health: Is NC5A’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.
  • 3. 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.