Assessing MIND C.T.I. Ltd's (NASDAQ:MNDO) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how MIND C.T.I is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its software industry peers.
Was MNDO's recent earnings decline worse than the long-term trend and the industry?
MNDO's trailing twelve-month earnings (from 31 March 2019) of US$5.5m has declined by -6.7% 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 3.4%, indicating the rate at which MNDO is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, MIND C.T.I has invested its equity funds well leading to a 30% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the US Software industry of 6.2%, indicating MIND C.T.I has used its assets more efficiently. However, its return on capital (ROC), which also accounts for MIND C.T.I’s debt level, has declined over the past 3 years from 29% to 28%.
What does this mean?
Though MIND C.T.I's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research MIND C.T.I to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MNDO’s future growth? Take a look at our free research report of analyst consensus for MNDO’s outlook.
- Financial Health: Are MNDO’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.