When Össur hf (CPSE:OSSR) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Össur hf 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 OSSR has performed. Check out our latest analysis for Össur hf
Could OSSR beat the long-term trend and outperform its industry?
I look at 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 allows me to analyze different stocks on a more comparable basis, using the latest information. For Össur hf, its most recent bottom-line (trailing twelve month) is US$57.65M, which, relative to the previous year’s level, has risen by 12.96%. Given that these figures are fairly myopic, I’ve computed an annualized five-year figure for Össur hf’s net income, which stands at US$45.32M This suggests that, on average, Össur hf has been able to increasingly improve its bottom line over the last few years as well.
How has it been able to do this? Let’s take a look at whether it is only owing to industry tailwinds, or if Össur hf has seen some company-specific growth. In the past couple of years, Össur hf expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the DK medical equipment industry has been growing its average earnings by double-digit 15.23% over the past twelve months, and a more muted 7.97% over the past five years. This shows that whatever tailwind the industry is benefiting from, Össur hf has not been able to leverage it as much as its average peer.
What does this mean?
Össur hf’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 Össur hf 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 OSSR’s future growth? Take a look at our free research report of analyst consensus for OSSR’s outlook.
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2. Financial Health: Is OSSR’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.