In this article, I will take a look at Progress Software Corporation’s (NASDAQ:PRGS) most recent earnings update (28 February 2019) and compare these latest figures against its performance over the past few years, along with how the rest of PRGS’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Did PRGS’s recent earnings growth beat the long-term trend and the industry?
PRGS’s trailing twelve-month earnings (from 28 February 2019) of US$59m has jumped 16% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.2%, indicating the rate at which PRGS is growing has accelerated. How has it been able to do this? Let’s see whether it is merely attributable to industry tailwinds, or if Progress Software has experienced some company-specific growth.
In terms of returns from investment, Progress Software has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 10% exceeds the US Software industry of 5.7%, indicating Progress Software has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Progress Software’s debt level, has increased over the past 3 years from 6.9% to 20%.
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 Progress Software gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Progress Software to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PRGS’s future growth? Take a look at our free research report of analyst consensus for PRGS’s outlook.
- Financial Health: Are PRGS’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 28 February 2019. This may not be consistent with full year annual report figures.
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