In this commentary, I will examine Itera ASA’s (OB:ITE) latest earnings update (30 September 2018) 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 ITE’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.
Did ITE perform better than its track record and industry?
ITE’s trailing twelve-month earnings (from 30 September 2018) of øre29m has increased by 1.3% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 32%, indicating the rate at which ITE is growing has slowed down. To understand what’s happening, let’s examine what’s going on with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Itera has invested its equity funds well leading to a 89% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 17% exceeds the NO IT industry of 9.6%, indicating Itera has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Itera’s debt level, has increased over the past 3 years from 13% to 104%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 20% to 16% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Itera has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Itera to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ITE’s future growth? Take a look at our free research report of analyst consensus for ITE’s outlook.
- Financial Health: Are ITE’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 September 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 firstname.lastname@example.org.