National Research (NRC) just posted its FY 2025 Q3 numbers, with revenue of US$34.6 million and EPS of US$0.18 setting the tone for a year that also includes a Q2 loss alongside a stronger Q1. Over recent quarters the company has seen revenue move from US$35.8 million in Q3 2024 to US$36.9 million in Q4 2024, then to US$33.6 million in Q1 2025 and US$34.0 million in Q2 2025. Over the same period, quarterly EPS shifted from US$0.24 to US$0.28, then US$0.25 before dipping slightly negative in Q2 2025. Taken together with an 11.6% net margin over the last twelve months and a long run of declining earnings, these results keep the spotlight firmly on how efficiently NRC is converting its top line into profit.

With the latest figures on the table, the next step is to line these margins and earnings trends up against the prevailing narratives around NRC to see which views hold up and which start to look out of sync.

Margins Slide To 11.6% On Weaker Profitability

• NRC’s net profit margin over the last twelve months is 11.6%, compared with 18.8% the prior year, alongside trailing net income of US$16.2 million on US$139.1 million of revenue.
• Critics focus on deteriorating profitability, and the margin step down fits that concern, yet the business is still earning positive profits:
  • The 11.6% margin sits against a five year annualized earnings decline of 12.4%, so the latest year lines up with a longer run of weaker earnings performance.
  • At the same time, NRC remained profitable in Q3 FY 2025 with US$4.0 million of net income after a Q2 loss of US$0.2 million, which shows the margin pressure has not pushed the company into a sustained loss based on the data provided.

Five Year Earnings Trend Still Under Pressure

• On a trailing twelve month basis, earnings have declined at an annualized rate of 12.4% over the past five years, while trailing EPS stepped down from 1.21 twelve months ago to 0.71 at Q3 FY 2025.
• Bears argue the long run EPS slide points to a business that is struggling to grow its bottom line, and the quarterly pattern backs that up:
  • Quarterly net income moved from US$6.2 million in Q2 FY 2024 to US$6.6 million in Q4 FY 2024, then to US$5.8 million in Q1 FY 2025 and US$4.0 million in Q3 FY 2025, which is consistent with the weaker trailing EPS numbers.
  • The move from positive EPS in every quarter of FY 2024 to a small EPS loss of US$0.01 in Q2 FY 2025 reinforces the bearish focus on earnings stability rather than one off noise.

Valuation Sits Between Industry And Peers

• NRC trades on a P/E of 24.7x compared with 22.6x for the broader US Healthcare industry and 55.4x for its peer group, while its current share price of US$17.62 sits above a DCF fair value estimate of US$15.13.
• What stands out for valuation focused investors is the tension between relative and absolute signals:
  • On one side, the P/E is modestly higher than the industry average yet materially lower than the 55.4x peer average, which some might read as leaving room versus direct comparables even though earnings have been shrinking.
  • On the other, the share price sits above the DCF fair value and the company carries high debt with a 3.63% dividend that is not comfortably covered by free cash flow, which keeps the focus on balance sheet strength and cash generation rather than just headline multiples.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on National Research's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

NRC is dealing with a long run earnings decline, weaker margins and a valuation that sits above a DCF fair value estimate while carrying high debt.

If shrinking profitability and balance sheet pressure make you cautious here, check out CTA_SCREENER_SOLID_BALANCE_SHEET to focus on companies with stronger finances and potentially steadier earnings power.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.