In this article, I will take a look at WNS (Holdings) Limited's (NYSE:WNS) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, along with how the rest of WNS's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Did WNS beat its long-term earnings growth trend and its industry?
WNS's trailing twelve-month earnings (from 30 June 2019) of US$111m has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 15%, indicating the rate at which WNS is growing has accelerated. What's enabled this growth? Let's take a look at if it is only a result of industry tailwinds, or if WNS (Holdings) has experienced some company-specific growth.
In terms of returns from investment, WNS (Holdings) has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the US IT industry of 5.7%, indicating WNS (Holdings) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for WNS (Holdings)’s debt level, has increased over the past 3 years from 15% to 16%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 24% to 11% over the past 5 years.
What does this mean?
While past data is useful, it 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? I recommend you continue to research WNS (Holdings) to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WNS’s future growth? Take a look at our free research report of analyst consensus for WNS’s outlook.
- Financial Health: Are WNS’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 30 June 2019. This may not be consistent with full year annual report figures.
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