Understanding how MoSys Inc (NASDAQ:MOSY) 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 MoSys is doing by comparing its latest earnings with its long-term trend as well as the performance of its semiconductor industry peers. See our latest analysis for MoSys
Commentary On MOSY’s Past PerformanceMOSY is loss-making, with the most recent trailing twelve-month earnings of -US$5.91m (from 31 March 2018), which compared to last year has become less negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$21.45m. Each year, for the past five years MOSY has seen an annual decline in revenue of -10.05%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Looking at growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 28.19% over the past year, and 14.26% over the past five. This suggests that, although MoSys is currently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
Given that MoSys is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -15.23%, the company’s current cash level (US$3.50m) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Although this is a relatively simplistic calculation, and MoSys may continue to reduce its costs further or raise debt capital instead of coming to equity markets, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues MoSys may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research MoSys to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MOSY’s future growth? Take a look at our free research report of analyst consensus for MOSY’s outlook.
- Financial Health: Is MOSY’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.