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Today I will take a look at Aware, Inc.'s (NASDAQ:AWRE) most recent earnings update (31 December 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the software industry performed. As an investor, I find it beneficial to assess AWRE’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How AWRE fared against its long-term earnings performance and its industry
AWRE's trailing twelve-month earnings (from 31 December 2018) of US$1.2m has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -22%, indicating the rate at which AWRE is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely because of an industry uplift, or if Aware has seen some company-specific growth.
In terms of returns from investment, Aware has fallen short of achieving a 20% return on equity (ROE), recording 2.0% instead. Furthermore, its return on assets (ROA) of 0.6% is below the US Software industry of 5.9%, indicating Aware's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Aware’s debt level, has declined over the past 3 years from 6.9% to 0.6%.
What does this mean?
Though Aware's past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn't always indicative of a continued optimistic outlook. There may be variables that are impacting the industry as a whole, hence the high industry growth rate over the same time period. I suggest you continue to research Aware to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AWRE’s future growth? Take a look at our free research report of analyst consensus for AWRE’s outlook.
- Financial Health: Are AWRE’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 31 December 2018. 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 email@example.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.