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After reading Altia Consultores SA.’s (BME:ALC) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Altia Consultores’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Altia Consultores

Commentary On ALC’s Past Performance

To account for any quarterly or half-yearly updates, 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 technique enables me to analyze different stocks in a uniform manner using the most relevant data points. For Altia Consultores, its most recent earnings (trailing twelve month) is €6.07M, which, against the previous year’s figure, has dropped by -22.95%. Since these values may be fairly short-term, I have determined an annualized five-year figure for Altia Consultores’s net income, which stands at €4.19M This shows that even though earnings growth was negative against last year, over the longer term, Altia Consultores’s earnings have been growing on average.

How has it been able to do this? Well, let’s take a look at if it is merely attributable to industry tailwinds, or if Altia Consultores has seen some company-specific growth. Over the last couple of years, Altia Consultores expanded its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the ES it industry has been growing its average earnings by double-digit 13.57% in the prior year, and 20.27% over the past five. This means any uplift the industry is deriving benefit from, Altia Consultores has not been able to leverage it as much as its average peer.

What does this mean?

Though Altia Consultores’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Altia Consultores to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is ALC’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 ALC 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 ALC 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 30 June 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.