Amdocs Limited (NASDAQ:DOX): Has Recent Earnings Growth Beaten Long-Term Trend?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Amdocs Limited (NASDAQ:DOX) useful as an attempt to give more color around how Amdocs is currently performing. Check out our latest analysis for Amdocs
How Did DOX’s Recent Performance Stack Up Against Its Past?
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 blend enables me to assess many different companies on a similar basis, using the most relevant data points. For Amdocs, its most recent earnings (trailing twelve month) is US$455.91M, which, relative to the prior year’s level, has jumped up by 12.21%. Given that these values are somewhat short-term, I have calculated an annualized five-year figure for DOX’s earnings, which stands at US$408.97M This means generally, Amdocs has been able to steadily grow its profits over the past few years as well.
How has it been able to do this? Let’s see if it is only attributable to an industry uplift, or if Amdocs has seen some company-specific growth. The hike in earnings seems to be propelled by a solid top-line increase beating its growth rate of expenses. Though this has led to a margin contraction, it has made Amdocs more profitable. Viewing growth from a sector-level, the US it industry has been growing, albeit, at a subdued single-digit rate of 3.62% over the prior twelve months, and a substantial 11.57% over the past half a decade. This suggests that whatever recent headwind the industry is facing, Amdocs is less exposed compared to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Amdocs 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 Amdocs to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for DOX’s future growth? Take a look at our free research report of analyst consensus for DOX’s outlook.
2. Financial Health: Is DOX’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 31 December 2017. 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.
