Understanding Pro Medicus Limited’s (ASX:PME) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Pro Medicus is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. Check out our latest analysis for Pro Medicus
Did PME’s recent EPS Growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to assess many different companies on a more comparable basis, using the most relevant data points. For Pro Medicus, the most recent bottom-line is A$9M, which, relative to last year’s figure, has increased by 46.37%. Given that these values are relatively short-term thinking, I’ve created an annualized five-year figure for Pro Medicus’s net income, which stands at A$3M. This means on average, Pro Medicus has been able to steadily grow its profits over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is merely because of an industry uplift, or if Pro Medicus has experienced some company-specific growth. In the last couple of years, Pro Medicus 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 Australian health care technology industry has been ramping up growth, more than doubling average earnings in the past year, and a strong 41.10% over the previous few years. This means that whatever uplift the industry is profiting from, Pro Medicus has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Pro Medicus has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Pro Medicus to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PME’s future growth? Take a look at our free research report of analyst consensus for PME’s outlook.
2. Financial Health: Is PME’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.