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Electromed Inc’s (ELMD) EPS Grew 4.3% In A Year. Was It Better Than Long-Term Trend?

Measuring Electromed Inc’s (AMEX:ELMD) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess ELMD’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for ELMD

Were ELMD’s earnings stronger than its past performances and the industry?

I look at 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 method enables me to assess different companies on a similar basis, using new information. For Electromed, the most recent twelve-month earnings is $2.2M, which, in comparison to last year’s level, has increased by a relatively muted 4.69%. Given that these values may be relatively short-term, I have calculated an annualized five-year figure for Electromed’s earnings, which stands at $0.5M. This means on average, Electromed has been able to gradually improve its bottom line over the last few years as well.

AMEX:ELMD Income Statement Dec 7th 17
AMEX:ELMD Income Statement Dec 7th 17

What’s enabled this growth? Let’s take a look at whether it is merely owing to industry tailwinds, or if Electromed has experienced some company-specific growth. In the last few years, Electromed grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the US healthcare equipment and supplies industry has been growing its average earnings by double-digit 18.95% over the prior twelve months, and a less exciting 8.90% over the past couple of years. This suggests that any tailwind the industry is benefiting from, Electromed has not been able to realize the gains unlike its average peer.

What does this mean?

Electromed’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Electromed has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Electromed to get a more holistic view of the stock by looking at:

1. Financial Health: Is ELMD’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.

2. Valuation: What is ELMD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ELMD is currently mispriced by the market.

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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.

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