When IRESS Limited (ASX:IRE) released its most recent earnings update (30 June 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well IRESS has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see IRE has performed.

Check out our latest analysis for IRESS

Have IRE's earnings improved against past performances and the industry?

IRE's trailing twelve-month earnings (from 30 June 2019) of AU$62m has increased by 0.3% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.1%, indicating the rate at which IRE is growing has slowed down. What could be happening here? Well, let's examine what's transpiring with margins and whether the rest of the industry is experiencing the hit as well.

In terms of returns from investment, IRESS has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. Furthermore, its return on assets (ROA) of 8.4% is below the AU Software industry of 8.5%, indicating IRESS's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for IRESS’s debt level, has declined over the past 3 years from 17% to 13%.

What does this mean?

IRESS's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While IRESS has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research IRESS to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for IRE’s future growth? Take a look at our free research report of analyst consensus for IRE’s outlook.

2. Financial Health: Are IRE’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.

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 30 June 2019. This may not be consistent with full year annual report figures.

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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.