Examining Aeeris Limited’s (ASX:AER) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AER’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. View out our latest analysis for Aeeris
Despite a decline, did AER underperform the long-term trend and the industry?
AER is loss-making, with the most recent trailing twelve-month earnings of -AU$1.84m (from 31 December 2017), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -AU$1.20m. Each year, for the past five years AER has seen an annual increase in operating expense growth, outpacing revenue growth of 15.59%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Eyeballing growth from a sector-level, the Australian internet industry has been growing its average earnings by double-digit 23.29% in the prior year, and 20.81% over the past five years. This means any tailwind the industry is enjoying, Aeeris has not been able to leverage it as much as its average peer.
Although Aeeris is loss-making, its has a long cash runway to meet its upcoming operating expenses should this remain constant at the current level of AU$9.87k (SG&A and one-year R&D) . This is a strong indication of good cash management.
What does this mean?
Aeeris’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 difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Aeeris may be facing and whether management guidance has regularly been met in the past. You should continue to research Aeeris to get a more holistic view of the stock by looking at:
- Financial Health: Is AER’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 AER 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 AER 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.