When Ebix, Inc. (NASDAQ:EBIX) released its most recent earnings update (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Ebix’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not EBIX actually performed well. Below is a quick commentary on how I see EBIX has performed.
How Did EBIX’s Recent Performance Stack Up Against Its Past?
EBIX’s trailing twelve-month earnings (from 31 December 2018) of US$93m has declined by -7.4% 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 13%, indicating the rate at which EBIX is growing has slowed down. Why is this? Let’s examine what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Ebix has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 7.4% exceeds the US Software industry of 5.5%, indicating Ebix has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Ebix’s debt level, has declined over the past 3 years from 14% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 14% to 135% over the past 5 years.
What does this mean?
Though Ebix’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. You should continue to research Ebix to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EBIX’s future growth? Take a look at our free research report of analyst consensus for EBIX’s outlook.
- Financial Health: Are EBIX’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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