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After looking at F5 Networks, Inc.'s (NASDAQ:FFIV) latest earnings announcement (31 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
How Did FFIV's Recent Performance Stack Up Against Its Past?
FFIV's trailing twelve-month earnings (from 31 March 2019) of US$503m has jumped 16% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.7%, indicating the rate at which FFIV is growing has accelerated. What's enabled this growth? Let's see if it is merely due to an industry uplift, or if F5 Networks has experienced some company-specific growth.
In terms of returns from investment, F5 Networks has invested its equity funds well leading to a 34% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US Communications industry of 5.4%, indicating F5 Networks has used its assets more efficiently. However, its return on capital (ROC), which also accounts for F5 Networks’s debt level, has declined over the past 3 years from 38% to 33%.
What does this mean?
Though F5 Networks's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as F5 Networks gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research F5 Networks to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FFIV’s future growth? Take a look at our free research report of analyst consensus for FFIV’s outlook.
- Financial Health: Are FFIV’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 March 2019. This may not be consistent with full year annual report figures.
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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.