Assessing esoft systems a/s’s (CPH:ESOFT) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess ESOFT’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for esoft systems
How Did ESOFT’s Recent Performance Stack Up Against Its Past?ESOFT’s trailing twelve-month earnings (from 31 December 2017) of ø7.11m has jumped 57.33% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 10.66%, indicating the rate at which ESOFT is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is only attributable to industry tailwinds, or if esoft systems has seen some company-specific growth.
The rise in earnings seems to be supported by a solid top-line increase outstripping its growth rate of costs. Though this has led to a margin contraction, it has made esoft systems more profitable. Inspecting growth from a sector-level, the DK commercial services industry has been growing, albeit, at a muted single-digit rate of 9.02% in the previous twelve months, and a substantial 11.14% over the previous five years. This means that any tailwind the industry is benefiting from, esoft systems is able to amplify this to its advantage.In terms of returns from investment, esoft systems has invested its equity funds well leading to a 22.83% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15.54% exceeds the DK Commercial Services industry of 6.04%, indicating esoft systems has used its assets more efficiently. However, its return on capital (ROC), which also accounts for esoft systems’s debt level, has declined over the past 3 years from 16.74% to 16.40%.
What does this mean?
esoft systems’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 esoft systems to get a more holistic view of the stock by looking at:
- Financial Health: Is ESOFT’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.
- Valuation: What is ESOFT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ESOFT is currently mispriced by the market.
- 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.