For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on CYCLIQ Group Limited (ASX:CYQ) useful as an attempt to give more color around how CYCLIQ Group is currently performing. Check out our latest analysis for CYCLIQ Group
Was CYQ’s weak performance lately a part of a long-term decline?
I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to examine different stocks in a uniform manner using new information. For CYCLIQ Group, its most recent trailing-twelve-month earnings is -AU$4.31M, which compared to the previous year’s level, has become more negative. Since these figures may be fairly short-term, I’ve computed an annualized five-year value for CYQ’s net income, which stands at -AU$2.89M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.We can further analyze CYCLIQ Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years CYCLIQ Group’s top-line has increased by 31.07% on average, implying 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 leisure industry has been growing, albeit, at a unexciting single-digit rate of 3.40% in the prior twelve months, and a substantial 14.84% over the past half a decade. This suggests that whatever recent headwind the industry is facing, it’s hitting CYCLIQ Group harder than its peers.
What does this mean?
CYCLIQ Group’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 forecast what will happen in the future and when. The most useful step is to examine company-specific issues CYCLIQ Group may be facing and whether management guidance has steadily been met in the past. You should continue to research CYCLIQ Group to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is CYQ’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.