When Flexiroam Limited (ASX:FRX) announced its most recent earnings (30 September 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 Flexiroam 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 FRX has performed. Check out our latest analysis for Flexiroam
Have FRX’s earnings improved against past performances and the industry?
To account for any quarterly or half-yearly updates, 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 examine many different companies on a similar basis, using the latest information. For Flexiroam, its most recent earnings (trailing twelve month) is -AU$5.50M, which, relative to the previous year’s figure, has become less negative. Given that these values may be relatively myopic, I have computed an annualized five-year figure for Flexiroam’s net income, which stands at -AU$3.46M. This suggests that, Flexiroam has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.We can further assess Flexiroam’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Flexiroam’s top-line has increased by 18.68% on average, indicating that the company 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 telecom industry has been growing, albeit, at a unexciting single-digit rate of 5.64% in the prior year, and a substantial 14.78% over the last five years. This suggests that whatever uplift the industry is benefiting from, Flexiroam has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Flexiroam’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Flexiroam may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Flexiroam to get a more holistic view of the stock by looking at:
- Financial Health: Is FRX’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.