Today I will take a look at Mensch und Maschine Software SE’s (FRA:MUM) most recent earnings update (31 March 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the software industry performed. As an investor, I find it beneficial to assess MUM’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.
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Did MUM’s recent earnings growth beat the long-term trend and the industry?
MUM’s trailing twelve-month earnings (from 31 March 2019) of €13m has jumped 37% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 30%, indicating the rate at which MUM is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at whether it is only because of an industry uplift, or if Mensch und Maschine Software has seen some company-specific growth.
In terms of returns from investment, Mensch und Maschine Software has invested its equity funds well leading to a 20% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.2% exceeds the DE Software industry of 5.3%, indicating Mensch und Maschine Software has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Mensch und Maschine Software’s debt level, has increased over the past 3 years from 13% to 24%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 104% to 33% over the past 5 years.
What does this mean?
Mensch und Maschine Software’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Mensch und Maschine Software to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MUM’s future growth? Take a look at our free research report of analyst consensus for MUM’s outlook.
- Financial Health: Are MUM’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 31 March 2019. This may not be consistent with full year annual report figures.
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