When ICON Public Limited Company (NASDAQ:ICLR) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how ICON performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see ICLR has performed. View our latest analysis for ICON
How Did ICLR’s Recent Performance Stack Up Against Its Past?
I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to examine various companies on a more comparable basis, using the most relevant data points. For ICON, the most recent earnings is $285M, which, against last year’s level, has climbed up by 13.20%. Given that these figures may be fairly short-term, I have estimated an annualized five-year figure for ICLR’s earnings, which stands at $145M. This means generally, ICON has been able to consistently improve its profits over the last couple of years as well.
What’s enabled this growth? Well, let’s take a look at whether it is solely a result of industry tailwinds, or if ICON has seen some company-specific growth. Over the last few years, ICON expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Looking at growth from a sector-level, the US life sciences tools and services industry has been growing its average earnings by double-digit 11.50% in the previous twelve months, and 12.72% over the past couple of years. This means whatever tailwind the industry is enjoying, ICON is able to amplify this to its advantage.
What does this mean?
ICON’s track record can be a valuable insight into its earnings performance, but it certainly 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 ICON to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ICLR’s future growth? Take a look at our free research report of analyst consensus for ICLR’s outlook.
2. Financial Health: Is ICLR’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.