Where Amdocs Limited's (NASDAQ:DOX) Earnings Growth Stands Against Its Industry
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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 Amdocs Limited's (NASDAQ:DOX) 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.
See our latest analysis for Amdocs
Was DOX's recent earnings decline worse than the long-term trend and the industry?
DOX's trailing twelve-month earnings (from 31 March 2019) of US$362m has declined by -19% 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 -2.6%, indicating the rate at which DOX is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Amdocs has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 7.0% exceeds the US IT industry of 5.6%, indicating Amdocs has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Amdocs’s debt level, has increased over the past 3 years from 12% to 13%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Usually companies that experience a prolonged period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. I suggest you continue to research Amdocs to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for DOX’s future growth? Take a look at our free research report of analyst consensus for DOX’s outlook.
Financial Health: Are DOX’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 editorial-team@simplywallst.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.
