For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Xilinx Inc’s (NASDAQ:XLNX) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Xilinx
How XLNX fared against its long-term earnings performance and its industry
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to analyze different companies on a more comparable basis, using the most relevant data points. For Xilinx, its most recent earnings (trailing twelve month) is $630.0M, which, against the prior year’s level, has grown by a fairly muted 4.54%. Given that these values may be fairly nearsighted, I’ve created an annualized five-year figure for Xilinx’s net income, which stands at $586.1M. This suggests that, generally, Xilinx has been able to consistently improve its profits over the last couple of years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if Xilinx has seen some company-specific growth. In the last few years, Xilinx grew its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 30.95% in the past year, and a more muted 5.99% over the previous few years. This shows that whatever uplift the industry is deriving benefit from, Xilinx has not been able to leverage it as much as its industry peers.
What does this mean?
Xilinx’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Xilinx 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 Xilinx to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for XLNX’s future growth? Take a look at our free research report of analyst consensus for XLNX’s outlook.
2. Financial Health: Is XLNX’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 30 September 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.