For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Infomedia Ltd’s (ASX:IFM) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Infomedia
Did IFM’s recent EPS Growth beat the long-term trend and the industry?
I like to 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 blend enables me to analyze many different companies on a more comparable basis, using the latest information. Infomedia’s most recent bottom-line is A$12M, which, relative to the prior year’s level, has increased by 15.79%. Since these figures are relatively nearsighted, I’ve computed an annualized five-year figure for Infomedia’s earnings, which stands at A$11M. This means on average, Infomedia has been able to steadily grow its bottom line over the past few years as well.
What’s enabled this growth? Well, let’s take a look at if it is merely attributable to an industry uplift, or if Infomedia has experienced some company-specific growth. The rise in earnings seems to be supported by a solid top-line increase beating its growth rate of expenses. Though this brought about a margin contraction, it has made Infomedia more profitable. Inspecting growth from a sector-level, the Australian software industry has been growing its average earnings by double-digit 15.51% over the past year, and 14.06% over the previous five years. This means that whatever uplift the industry is gaining from, Infomedia is able to amplify this to its advantage.
What does this mean?
Infomedia’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Infomedia 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 Infomedia to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for IFM’s future growth? Take a look at our free research report of analyst consensus for IFM’s outlook.
2. Financial Health: Is IFM’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.