After looking at Epsilon Net SA.’s (ATSE:EPSIL) latest earnings update (30 June 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. View our latest analysis for Epsilon Net
Did EPSIL beat its long-term earnings growth trend and its industry?
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 assess many different companies in a uniform manner using the most relevant data points. For Epsilon Net, its most recent trailing-twelve-month earnings is €283.67K, which, against the previous year’s figure, has increased by 19.78%. Since these values are fairly myopic, I have estimated an annualized five-year figure for Epsilon Net’s net income, which stands at €199.71K This suggests that, generally, Epsilon Net has been able to gradually grow its earnings over the last few years as well.
What’s enabled this growth? Let’s see if it is merely due to industry tailwinds, or if Epsilon Net has experienced some company-specific growth. Over the last couple of years, Epsilon Net increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the GR software industry has been enduring some headwinds in the previous year, leading to an average earnings drop of -4.57%. This is a significant change, given that the industry has constantly been delivering a a strong growth of 18.48% in the past half a decade. This means that whatever near-term headwind the industry is experiencing, Epsilon Net is less exposed compared to its peers.
What does this mean?
Epsilon Net’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Epsilon Net gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Epsilon Net to get a more holistic view of the stock by looking at: