Assessing Medidata Solutions, Inc.'s (NASDAQ:MDSO) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess MDSO's latest performance announced on 31 December 2018 and evaluate these figures to its historical trend and industry movements.
Did MDSO beat its long-term earnings growth trend and its industry?
MDSO's trailing twelve-month earnings (from 31 December 2018) of US$52m has increased by 9.1% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 42%, indicating the rate at which MDSO is growing has slowed down. What could be happening here? Well, let's examine what's occurring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Medidata Solutions has fallen short of achieving a 20% return on equity (ROE), recording 8.2% instead. However, its return on assets (ROA) of 6.6% exceeds the US Healthcare Services industry of 6.3%, indicating Medidata Solutions has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Medidata Solutions’s debt level, has increased over the past 3 years from 5.2% to 6.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 102% to 15% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Medidata Solutions has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Medidata Solutions to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MDSO’s future growth? Take a look at our free research report of analyst consensus for MDSO’s outlook.
- Financial Health: Are MDSO’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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