Does Aptitude Software Group plc’s (LON:APTD) Past Performance Indicate A Stronger Future?

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For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Aptitude Software Group plc’s (LON:APTD) 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.

See our latest analysis for Aptitude Software Group

Did APTD’s recent earnings growth beat the long-term trend and the industry?

APTD’s trailing twelve-month earnings (from 31 December 2018) of UK£14m has jumped 31% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 23%, indicating the rate at which APTD is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is only owing to an industry uplift, or if Aptitude Software Group has seen some company-specific growth.

LSE:APTD Income Statement, July 4th 2019
LSE:APTD Income Statement, July 4th 2019

In terms of returns from investment, Aptitude Software Group has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the GB Software industry of 4.2%, indicating Aptitude Software Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Aptitude Software Group’s debt level, has increased over the past 3 years from 14% to 18%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 35% to 18% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Aptitude Software Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Aptitude Software Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for APTD’s future growth? Take a look at our free research report of analyst consensus for APTD’s outlook.
  2. Financial Health: Are APTD’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 31 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.