When Perficient, Inc. (NASDAQ:PRFT) announced its most recent earnings (31 December 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Perficient performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see PRFT has performed.
How Did PRFT’s Recent Performance Stack Up Against Its Past?
PRFT’s trailing twelve-month earnings (from 31 December 2018) of US$25m has jumped 32% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.2%, indicating the rate at which PRFT is growing has accelerated. How has it been able to do this? Let’s take a look at if it is merely owing to an industry uplift, or if Perficient has experienced some company-specific growth.
In terms of returns from investment, Perficient has fallen short of achieving a 20% return on equity (ROE), recording 6.9% instead. Furthermore, its return on assets (ROA) of 4.9% is below the US IT industry of 5.7%, indicating Perficient’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Perficient’s debt level, has declined over the past 3 years from 8.8% to 8.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 7.4% to 34% over the past 5 years.
What does this mean?
Perficient’s track record can be a valuable insight into its earnings performance, but it certainly 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 Perficient to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PRFT’s future growth? Take a look at our free research report of analyst consensus for PRFT’s outlook.
- Financial Health: Are PRFT’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.
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