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When Industria de Diseño Textil SA. (BME:ITX) announced its most recent earnings (31 January 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Industria de Diseño Textil performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see ITX has performed. Check out our latest analysis for Industria de Diseño Textil
Did ITX beat its long-term earnings growth trend and its industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to analyze various companies on a similar basis, using the most relevant data points. For Industria de Diseño Textil, its latest trailing-twelve-month earnings is €3.37B, which, relative to last year’s figure, has grown by a fairly muted 6.68%. Given that these values may be fairly nearsighted, I’ve calculated an annualized five-year figure for ITX’s earnings, which stands at €2.56B This shows that, generally, Industria de Diseño Textil has been able to consistently grow its earnings over the last couple of years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is merely attributable to an industry uplift, or if Industria de Diseño Textil has seen some company-specific growth. The ascend in earnings seems to be driven by a robust top-line increase beating its growth rate of expenses. Though this resulted in a margin contraction, it has made Industria de Diseño Textil more profitable. Eyeballing growth from a sector-level, the ES specialty retail industry has been growing, albeit, at a unexciting single-digit rate of 8.19% in the prior twelve months, and 6.18% over the previous five years. This means whatever uplift the industry is profiting from, Industria de Diseño Textil has not been able to reap as much as its industry peers.
What does this mean?
Industria de Diseño Textil’s track record can be a valuable insight into its earnings performance, but it certainly 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 Industria de Diseño Textil to get a more holistic view of the stock by looking at: