After reading Xenith IP Group Limited’s (ASX:XIP) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Xenith IP Group’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Xenith IP Group
How Well Did XIP Perform?
For the most up-to-date info, I use data from the most recent 12 months, 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 enables me to analyze various companies in a uniform manner using the most relevant data points. For Xenith IP Group, its most recent trailing-twelve-month earnings is AU$4.33M, which, relative to the previous year’s figure, Given that these values may be somewhat short-term, I’ve created an annualized five-year value for XIP’s earnings, which stands at AU$5.21M This shows that Xenith IP Group’s average annual earnings have traditionally been higher, which signals a downward trend in the bottom line.Why could this be happening? Well, let’s examine what’s transpiring with margins and if the entire industry is feeling the heat. Revenue growth in the past couple of years, has been positive, however, earnings growth has not been able to catch up, meaning Xenith IP Group has been growing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the Australian professional services industry has been enduring some headwinds over the last couple of years, leading to an average earnings drop of -18.29% in the most recent year. This suggests that any near-term headwind the industry is enduring, Xenith IP Group is relatively better-cushioned than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. I suggest you continue to research Xenith IP Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for XIP’s future growth? Take a look at our free research report of analyst consensus for XIP’s outlook.
- Financial Health: Is XIP’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.