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CSG Systems International, Inc.'s (NASDAQ:CSGS) Earnings Grew 29%, Did It Beat Long-Term Trend?

Simply Wall St

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Analyzing CSG Systems International, Inc.'s (NASDAQ:CSGS) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess CSGS's recent performance announced on 31 March 2019 and compare these figures to its long-term trend and industry movements.

View our latest analysis for CSG Systems International

How CSGS fared against its long-term earnings performance and its industry

CSGS's trailing twelve-month earnings (from 31 March 2019) of US$71m has jumped 29% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.8%, indicating the rate at which CSGS is growing has accelerated. What's enabled this growth? Let's take a look at if it is only due to industry tailwinds, or if CSG Systems International has experienced some company-specific growth.

NasdaqGS:CSGS Income Statement, June 18th 2019

In terms of returns from investment, CSG Systems International has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 7.8% exceeds the US IT industry of 5.6%, indicating CSG Systems International has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for CSG Systems International’s debt level, has declined over the past 3 years from 22% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 71% to 98% over the past 5 years.

What does this mean?

Though CSG Systems International's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research CSG Systems International to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CSGS’s future growth? Take a look at our free research report of analyst consensus for CSGS’s outlook.
  2. Financial Health: Are CSGS’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 March 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.