When engage:BDR Limited (ASX:EN1) released its most recent earnings update (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well engage:BDR has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see EN1 has performed. Check out our latest analysis for engage:BDR
How Well Did EN1 Perform?
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 allows me to analyze many different companies on a more comparable basis, using the most relevant data points. engage:BDR’s most recent twelve-month earnings -A$3.6M, which compared to the prior year’s figure, has become less negative. Given that these values are somewhat nearsighted, I have created an annualized five-year value for engage:BDR’s net income, which stands at -A$2.9M. This suggests that, engage:BDR has historically performed better than recently, despite the fact that it seems like earnings are now heading back in the right direction again.Additionally, we can evaluate engage:BDR’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -22.87%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the Australian internet software and services industry has been relatively flat in terms of earnings growth over the last couple of years. This suggests that whatever recent headwind the industry is enduring, engage:BDR is less exposed compared to its peers.
What does this mean?
Though engage:BDR’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 envisage what will happen in the future and when. The most insightful step is to assess company-specific issues engage:BDR may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research engage:BDR to get a better picture of the stock by looking at:
1. Financial Health: Is EN1’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.