Yahoo Finance Want To Invest In CDK Global Inc (NASDAQ:CDK)? Here’s How It Performed Lately
Understanding how CDK Global Inc (NASDAQ:CDK) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how CDK Global is doing by comparing its latest earnings with its long-term trend as well as the performance of its software industry peers. View our latest analysis for CDK Global
Could CDK beat the long-term trend and outperform its industry?
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze many different companies on a more comparable basis, using the latest information. For CDK Global, its most recent trailing-twelve-month earnings is US$340.10M, which, against last year’s figure, has climbed up by 15.21%. Since these figures are somewhat nearsighted, I’ve computed an annualized five-year figure for CDK Global’s net income, which stands at US$234.80M This shows that, generally, CDK Global has been able to consistently grow its net income over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is merely because of an industry uplift, or if CDK Global has experienced some company-specific growth. Over the last couple of years, CDK Global increased its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the US software industry has been growing its average earnings by double-digit 13.27% over the prior twelve months, and 12.92% over the last five years. This means any uplift the industry is enjoying, CDK Global is able to leverage this to its advantage.
What does this mean?
Though CDK Global’s past data is helpful, it is only one aspect of my investment thesis. While CDK Global has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research CDK Global to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CDK’s future growth? Take a look at our free research report of analyst consensus for CDK’s outlook.
Financial Health: Is CDK’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 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.
