Where IMS SA (WSE:IMS) Stands In Terms Of Earnings Growth Against Its Industry
After looking at IMS SA’s (WSE:IMS) latest earnings announcement (31 March 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for IMS
Could IMS beat the long-term trend and outperform its industry?
IMS’s trailing twelve-month earnings (from 31 March 2018) of zł9.09m has jumped 64.91% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 28.28%, indicating the rate at which IMS is growing has accelerated. What’s enabled this growth? Let’s see if it is merely attributable to industry tailwinds, or if IMS has seen some company-specific growth.
Over the last couple of years, IMS grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the PL media industry has been growing, albeit, at a muted single-digit rate of 4.19% in the past year, and a substantial 19.67% over the past half a decade. This means whatever recent headwind the industry is facing, the impact on IMS has been softer relative to its peers.
In terms of returns from investment, IMS has invested its equity funds well leading to a 39.56% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 23.17% exceeds the PL Media industry of 9.05%, indicating IMS has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for IMS’s debt level, has increased over the past 3 years from 30.49% to 36.26%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 89.69% to 41.76% over the past 5 years.
What does this mean?
IMS’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While IMS 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 IMS to get a more holistic view of the stock by looking at:
Financial Health: Is IMS’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.
Valuation: What is IMS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether IMS is currently mispriced by the market.
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.
