Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at NXP Semiconductors NV.’s (NASDAQ:NXPI) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for NXP Semiconductors
Despite a decline, did NXPI underperform the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine different companies on a more comparable basis, using new information. For NXP Semiconductors, its latest earnings (trailing twelve month) is US$968.00M, which, against the prior year’s figure, has dropped by a significant -48.63%. Given that these figures may be fairly myopic, I have determined an annualized five-year value for NXP Semiconductors’s earnings, which stands at US$608.21M This shows that while earnings growth was negative from last year, over the longer term, NXP Semiconductors’s profits have been growing on average.
How has it been able to do this? Let’s take a look at whether it is only attributable to an industry uplift, or if NXP Semiconductors has seen some company-specific growth. Over the last few years, NXP Semiconductors grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Scanning growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 28.19% over the past twelve months, and 14.26% over the past five. This means any uplift the industry is profiting from, NXP Semiconductors has not been able to reap as much as its industry peers.
What does this mean?
NXP Semiconductors’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research NXP Semiconductors to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NXPI’s future growth? Take a look at our free research report of analyst consensus for NXPI’s outlook.
- Financial Health: Is NXPI’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 01 April 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.