Stock Analysis

Was Asseco South Eastern Europe SA.'s (WSE:ASE) Earnings Growth Better Than The Industry's?

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When Asseco South Eastern Europe SA. (WSE:ASE) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Asseco South Eastern Europe performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see ASE has performed. See our latest analysis for Asseco South Eastern Europe

How ASE fared against its long-term earnings performance and its industry

I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to analyze different companies in a uniform manner using new information. For Asseco South Eastern Europe, its most recent trailing-twelve-month earnings is ZŁ54.65M, which, relative to the previous year's figure, has risen by a fairly unexciting 6.18%. Since these values are relatively short-term, I’ve determined an annualized five-year figure for Asseco South Eastern Europe's net income, which stands at ZŁ46.32M This shows that, on average, Asseco South Eastern Europe has been able to gradually raise its earnings over the past few years as well.

WSE:ASE Income Statement Mar 31st 18
WSE:ASE Income Statement Mar 31st 18
How has it been able to do this? Well, let’s take a look at whether it is merely owing to industry tailwinds, or if Asseco South Eastern Europe has seen some company-specific growth. The ascend in earnings seems to be bolstered by a substantial top-line increase outstripping its growth rate of expenses. Though this resulted in a margin contraction, it has made Asseco South Eastern Europe more profitable. Scanning growth from a sector-level, the PL it industry has been growing its average earnings by double-digit 10.53% in the previous twelve months, and a flatter 1.06% over the previous five years. This suggests that whatever uplift the industry is enjoying, Asseco South Eastern Europe has not been able to realize the gains unlike its industry peers.

What does this mean?

Though Asseco South Eastern Europe's past data is helpful, it is only one aspect of my investment thesis. While Asseco South Eastern Europe 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 Asseco South Eastern Europe to get a better picture of the stock by looking at:

  • 1. Financial Health: Is ASE’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.
  • 2. Valuation: What is ASE 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 ASE is currently mispriced by the market.
  • 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 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.