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Does IRESS Limited’s (ASX:IRE) Recent Track Record Look Strong?

Measuring IRESS Limited’s (ASX:IRE) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess IRE’s recent performance announced on 30 June 2018 and compare these figures to its historical trend and industry movements.

Check out our latest analysis for IRESS

Could IRE beat the long-term trend and outperform its industry?

IRE’s trailing twelve-month earnings (from 30 June 2018) of AU$62m has jumped 11% compared to the previous year.

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However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which IRE is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the entire industry is experiencing the hit as well.

ASX:IRE Income Statement Export October 23rd 18
ASX:IRE Income Statement Export October 23rd 18

In terms of returns from investment, IRESS has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 10.0% exceeds the AU Software industry of 9.3%, indicating IRESS has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for IRESS’s debt level, has increased over the past 3 years from 12% 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. You should 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 2018. This may not be consistent with full year annual report figures.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.