Measuring Over the Wire Holdings Limited’s (ASX:OTW) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess OTW’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Over the Wire Holdings

Commentary On OTW’s Past Performance

I prefer 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 allows me to examine many different companies in a uniform manner using new information. For Over the Wire Holdings, its most recent bottom-line (trailing twelve month) is AU$4.21M, which, against last year’s level, has moved up by 40.50%. Since these values may be fairly nearsighted, I have estimated an annualized five-year value for Over the Wire Holdings’s net income, which stands at AU$2.59M This suggests that, on average, Over the Wire Holdings has been able to increasingly grow its profits over the past few years as well.

How has it been able to do this? Well, let’s take a look at if it is merely due to an industry uplift, or if Over the Wire Holdings has experienced some company-specific growth. Over the last couple of years, Over the Wire Holdings increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian internet industry has been growing its average earnings by double-digit 15.92% in the prior year, and 10.14% over the past five. This suggests that whatever tailwind the industry is deriving benefit from, Over the Wire Holdings is capable of leveraging this to its advantage.

What does this mean?

Over the Wire Holdings’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 Over the Wire Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Over the Wire Holdings to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.