With 13% Earnings Growth, Did Endava plc (NYSE:DAVA) Outperform The Industry?

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Measuring Endava plc’s (NYSE:DAVA) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess DAVA’s recent performance announced on 31 March 2019 and compare these figures to its historical trend and industry movements.

Check out our latest analysis for Endava

Commentary On DAVA’s Past Performance

DAVA’s trailing twelve-month earnings (from 31 March 2019) of UK£21m has jumped 13% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which DAVA is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is only because of an industry uplift, or if Endava has experienced some company-specific growth.

NYSE:DAVA Income Statement, June 10th 2019
NYSE:DAVA Income Statement, June 10th 2019

In terms of returns from investment, Endava has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 12% exceeds the US IT industry of 5.6%, indicating Endava has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Endava’s debt level, has declined over the past 3 years from 61% to 20%.

What does this mean?

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

  1. Future Outlook: What are well-informed industry analysts predicting for DAVA’s future growth? Take a look at our free research report of analyst consensus for DAVA’s outlook.
  2. Financial Health: Are DAVA’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 March 2019. 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.