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After reading Sylogist Ltd.'s (CVE:SYZ) latest earnings update (31 March 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether SYZ has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Commentary On SYZ's Past Performance
SYZ's trailing twelve-month earnings (from 31 March 2019) of CA$13m has jumped 31% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 33%, indicating the rate at which SYZ is growing has slowed down. To understand what's happening, let’s take a look at what’s occurring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Sylogist 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 20% exceeds the CA IT industry of 5.6%, indicating Sylogist has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sylogist’s debt level, has increased over the past 3 years from 10% to 27%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Sylogist has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Sylogist to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SYZ’s future growth? Take a look at our free research report of analyst consensus for SYZ’s outlook.
- Financial Health: Are SYZ’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.
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 firstname.lastname@example.org. 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.