Examining how Integral Diagnostics Limited (ASX:IDX) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Integral Diagnostics is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its healthcare industry peers.
How Well Did IDX Perform?
IDX’s trailing twelve-month earnings (from 30 June 2018) of AU$15m has declined by -2.6% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 26%, indicating the rate at which IDX is growing has slowed down. Why is this? Let’s examine what’s transpiring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, Integral Diagnostics has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 9.1% exceeds the AU Healthcare industry of 4.7%, indicating Integral Diagnostics has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Integral Diagnostics’s debt level, has declined over the past 3 years from 21% to 18%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.5% to 70% over the past 5 years.
What does this mean?
Though Integral Diagnostics’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Integral Diagnostics to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for IDX’s future growth? Take a look at our free research report of analyst consensus for IDX’s outlook.
- Financial Health: Are IDX’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.