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Assessing MicroStrategy Incorporated's (NASDAQ:MSTR) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess MSTR's recent performance announced on 31 December 2018 and evaluate these figures to its long-term trend and industry movements.
Did MSTR beat its long-term earnings growth trend and its industry?
MSTR's trailing twelve-month earnings (from 31 December 2018) of US$23m has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -0.9%, indicating the rate at which MSTR is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely owing to industry tailwinds, or if MicroStrategy has seen some company-specific growth.
In terms of returns from investment, MicroStrategy has fallen short of achieving a 20% return on equity (ROE), recording 4.2% instead. Furthermore, its return on assets (ROA) of 1.2% is below the US Software industry of 5.9%, indicating MicroStrategy's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for MicroStrategy’s debt level, has declined over the past 3 years from 28% to 0.7%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There may be variables that are impacting the entire industry thus the high industry growth rate over the same time frame. I recommend you continue to research MicroStrategy to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MSTR’s future growth? Take a look at our free research report of analyst consensus for MSTR’s outlook.
- Financial Health: Are MSTR’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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.