In this article, I will take a look at Telesto SA.’s (WSE:TLO) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, along with how the rest of TLO’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. See our latest analysis for Telesto
Despite a decline, did TLO underperform the long-term trend and the 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 method enables me to analyze different stocks on a similar basis, using new information. For Telesto, its latest earnings (trailing twelve month) is -ZŁ1.07M, which, relative to last year’s figure, has become more negative. Given that these figures are relatively nearsighted, I’ve calculated an annualized five-year figure for TLO’s net income, which stands at -ZŁ286.03K. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.We can further evaluate Telesto’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Telesto’s revenue growth has been fairly soft, with an annual growth rate of -1.28%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the PL machinery industry has been growing, albeit, at a muted single-digit rate of 5.93% over the previous twelve months, . This is a change from a volatile drop of -9.98% in the last few years. This means that any tailwind the industry is profiting from, Telesto has not been able to gain as much as its industry peers.
What does this mean?
Though Telesto’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Telesto may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Telesto to get a better picture of the stock by looking at:
- Financial Health: Is TLO’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.
- Valuation: What is TLO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TLO is currently mispriced by the market.
- 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.