Assessing Sprintex Limited’s (ASX:SIX) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess SIX’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. See our latest analysis for Sprintex
Did SIX beat its long-term earnings growth trend and its industry?
I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze different stocks on a more comparable basis, using the most relevant data points. For Sprintex, its most recent trailing-twelve-month earnings is -AU$3.33M, which, relative to last year’s figure, has become less negative. Since these values are relatively nearsighted, I’ve computed an annualized five-year value for Sprintex’s earnings, which stands at -AU$4.60M. This means even though net income is negative, it has become less negative over the years.We can further assess Sprintex’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Sprintex’s top-line has grown by 14.68% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the Australian auto components industry has been growing, albeit, at a muted single-digit rate of 4.15% in the prior twelve months, and a flatter -1.94% over the past five. This means despite the fact that Sprintex is currently running a loss, whatever near-term headwind the industry is facing, the impact on Sprintex has been softer relative to its peers.
What does this mean?
Sprintex’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Sprintex may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Sprintex to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Financial Health: Is SIX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.