Paradox Interactive AB (publ) (STO:PDX): Has Recent Earnings Growth Beaten Long-Term Trend?
Measuring Paradox Interactive AB (publ)’s (OM:PDX) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess PDX’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements. See our latest analysis for Paradox Interactive
Commentary On PDX’s Past Performance
I look at the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to analyze many different companies on a more comparable basis, using the latest information. For Paradox Interactive, its latest trailing-twelve-month earnings is KR344.51M, which, relative to the previous year’s figure, has risen by 37.67%. Since these figures may be fairly short-term thinking, I have created an annualized five-year value for Paradox Interactive’s net income, which stands at KR216.55M This means generally, Paradox Interactive has been able to steadily raise its profits over the last couple of years as well.
What’s enabled this growth? Let’s take a look at if it is solely because of industry tailwinds, or if Paradox Interactive has seen some company-specific growth. Over the past couple of years, Paradox Interactive expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the SE software industry has been growing its average earnings by double-digit 44.31% in the prior year, and 32.54% over the past five years. This means any tailwind the industry is profiting from, Paradox Interactive has not been able to gain as much as its average peer.
What does this mean?
Paradox Interactive’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Paradox Interactive to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PDX’s future growth? Take a look at our free research report of analyst consensus for PDX’s outlook.
Financial Health: Is PDX’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 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.
