Yahoo Finance Was Integrated Research Limited’s (ASX:IRI) Earnings Growth Better Than The Industry’s?
Examining how Integrated Research Limited (ASX:IRI) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Integrated Research is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its software industry peers.
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How IRI fared against its long-term earnings performance and its industry
IRI’s trailing twelve-month earnings (from 30 June 2018) of AU$19m has increased by 3.6% 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 17%, indicating the rate at which IRI is growing has slowed down. To understand what’s happening, let’s take a look at what’s transpiring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Integrated Research has invested its equity funds well leading to a 33% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 17% exceeds the AU Software industry of 8.8%, indicating Integrated Research has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Integrated Research’s debt level, has declined over the past 3 years from 38% to 34%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Integrated Research to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for IRI’s future growth? Take a look at our free research report of analyst consensus for IRI’s outlook.
Financial Health: Are IRI’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.
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.
