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After looking at Vincit Group Oyj’s (HLSE:VINCIT) latest earnings update (31 December 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. Check out our latest analysis for Vincit Group Oyj
Were VINCIT’s earnings stronger than its past performances and the industry?
I use data from the most recent 12 months, 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 enables me to assess many different companies in a uniform manner using the most relevant data points. For Vincit Group Oyj, its latest earnings (trailing twelve month) is €2.65M, which, in comparison to the previous year’s level, has climbed up by 21.46%. Given that these values are fairly short-term thinking, I’ve estimated an annualized five-year value for Vincit Group Oyj’s earnings, which stands at €2.20M This shows that, generally, Vincit Group Oyj has been able to steadily grow its net income over the last couple of years as well.
What’s enabled this growth? Well, let’s take a look at if it is only attributable to an industry uplift, or if Vincit Group Oyj has experienced some company-specific growth. The hike in earnings seems to be propelled by a robust top-line increase beating its growth rate of expenses. Though this has led to a margin contraction, it has made Vincit Group Oyj more profitable. Viewing growth from a sector-level, the FI software industry has been enduring severe headwinds over the last few years, leading to an average earnings drop of -31.78% in the most recent year. This shows that whatever recent headwind the industry is enduring, the impact on Vincit Group Oyj has been softer relative to its peers.
What does this mean?
Vincit Group Oyj’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 Vincit Group Oyj gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Vincit Group Oyj to get a more holistic view of the stock by looking at: