Was Radcom Ltd’s (NASDAQ:RDCM) Earnings Growth Better Than The Industry’s?
Examining Radcom Ltd’s (NASDAQ:RDCM) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess RDCM’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. See our latest analysis for Radcom
How RDCM fared against its long-term earnings performance and its industry
I like to use data from the most recent 12 months, 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 technique enables me to analyze different companies on a similar basis, using the most relevant data points. For Radcom, its most recent trailing-twelve-month earnings is US$2.90M, which, relative to last year’s level, has climbed up by an impressive 51.49%. Since these values may be fairly nearsighted, I have calculated an annualized five-year value for Radcom’s net income, which stands at -US$921.93K This means generally, Radcom has been able to steadily improve its net income over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is solely attributable to an industry uplift, or if Radcom has experienced some company-specific growth. Over the past couple of years, Radcom increased its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US communications industry has been growing its average earnings by double-digit 33.31% in the prior twelve months, and a more subdued 9.36% over the past half a decade. This means any tailwind the industry is enjoying, Radcom is capable of leveraging this to its advantage.
What does this mean?
Radcom’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Radcom 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 Radcom to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for RDCM’s future growth? Take a look at our free research report of analyst consensus for RDCM’s outlook.
Financial Health: Is RDCM’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 2017. 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.
