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Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Melexis NV’s (ENXTBR:MELE) 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. Check out our latest analysis for Melexis
Did MELE beat its long-term earnings growth trend and its industry?
I prefer to use 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 method enables me to assess different companies on a similar basis, using new information. For Melexis, its most recent trailing-twelve-month earnings is €114.30M, which, relative to last year’s figure, has jumped up by 15.61%. Given that these figures are somewhat short-term thinking, I have estimated an annualized five-year figure for Melexis’s net income, which stands at €76.90M This means that, generally, Melexis has been able to increasingly grow its earnings over the past couple of years as well.
How has it been able to do this? Well, let’s take a look at if it is solely attributable to an industry uplift, or if Melexis has experienced some company-specific growth. Over the last couple of years, Melexis increased its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the BE semiconductor industry has been growing its average earnings by double-digit 29.99% in the prior year, and 11.59% over the past five years. This shows that any uplift the industry is deriving benefit from, Melexis has not been able to gain as much as its average peer.
What does this mean?
Though Melexis’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Melexis gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Melexis to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for MELE’s future growth? Take a look at our free research report of analyst consensus for MELE’s outlook.
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Financial Health: Is MELE’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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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 March 2018. 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.