Measuring Aspen Technology Inc’s (NASDAQ:AZPN) track record of past performance is a useful exercise for investors. It enables 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 AZPN’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Aspen Technology
How Well Did AZPN Perform?
For the most up-to-date info, I 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 enables me to examine many different companies on a similar basis, using the most relevant data points. For Aspen Technology, its most recent bottom-line (trailing twelve month) is US$163.02M, which compared to the previous year’s level, has climbed up by 17.70%. Since these figures are somewhat nearsighted, I have estimated an annualized five-year value for AZPN’s net income, which stands at US$80.45M This shows that, on average, Aspen Technology has been able to gradually raise its bottom line over the past few years as well.
How has it been able to do this? Let’s see whether it is solely owing to industry tailwinds, or if Aspen Technology has experienced some company-specific growth. In the past few years, Aspen Technology grew its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US software industry has been growing its average earnings by double-digit 10.68% over the past year, and 11.62% over the previous five years. This means whatever tailwind the industry is enjoying, Aspen Technology is able to amplify this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Aspen Technology to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for AZPN’s future growth? Take a look at our free research report of analyst consensus for AZPN’s outlook.
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2. Financial Health: Is AZPN’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.
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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.
To help readers see pass 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.