When Property Connect Holdings Limited (ASX:PCH) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Property Connect Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not PCH actually performed well. Below is a quick commentary on how I see PCH has performed. View our latest analysis for Property Connect Holdings
How Well Did PCH Perform?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine different companies in a uniform manner using the most relevant data points. For Property Connect Holdings, its latest earnings (trailing twelve month) is -AU$2.29M, which, against the prior year’s level, has become more negative. Since these figures may be fairly short-term, I’ve determined an annualized five-year value for PCH’s earnings, which stands at -AU$2.01M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.We can further examine Property Connect Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Property Connect Holdings’s top-line more than doubled on average, signalling that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the Australian internet industry has been growing its average earnings by double-digit 30.11% in the previous year, and 27.02% over the past five. This means that whatever uplift the industry is enjoying, Property Connect Holdings has not been able to gain as much as its industry peers.
What does this mean?
Property Connect Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Property Connect Holdings may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Property Connect Holdings to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is PCH’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.