For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Sprintex Limited (ASX:SIX) useful as an attempt to give more color around how Sprintex is currently performing. Check out our latest analysis for Sprintex
Was SIX’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, I 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 blend allows me to examine different stocks on a more comparable basis, using the most relevant data points. For Sprintex, the latest earnings -A$4.3M, which, relative to last year’s level, has become more negative. Given that these values are somewhat myopic, I’ve created an annualized five-year value for SIX’s net income, which stands at -A$4.6M. This means although net income is negative, it has become less negative over the years.We can further assess Sprintex’s loss by looking at what has been happening in the industry along with within the company. Initially, I want to briefly look into the line items. Revenue growth over past couple of years has grew by 16.05%, implying that Sprintex is in a high-growth period with expenses racing ahead elevated top-line growth rates. Eyeballing growth from a sector-level, the Australian auto components industry has been growing, albeit, at a subdued single-digit rate of 3.32% in the past year, . This is a turnaround from a volatile drop of -3.75% in the past couple of years. This means whatever near-term the industry is experiencing, it’s hitting Sprintex harder than its peers.
What does this mean?
Though Sprintex’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most useful step is to examine company-specific issues Sprintex may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Sprintex to get a better picture of the stock by looking at:
1. Financial Health: Is SIX’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.