Does Sky and Space Global Limited’s (ASX:SAS) -23.10% Earnings Decline Reflect A Long-Term Trend?

Examining Sky and Space Global Limited’s (ASX:SAS) 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 SAS’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Sky andce Global

Was SAS’s recent earnings decline worse than the long-term trend and the industry?

For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to analyze various companies on a similar basis, using new information. For Sky andce Global, its most recent bottom-line (trailing twelve month) is -AU$15.25M, which, in comparison to the previous year’s figure, has become more negative. Given that these figures are fairly nearsighted, I have created an annualized five-year figure for Sky andce Global’s earnings, which stands at -AU$13.76M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.

ASX:SAS Income Statement Mar 6th 18
ASX:SAS Income Statement Mar 6th 18
We can further examine Sky andce Global’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Sky andce Global’s top-line more than doubled on average, indicating 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 telecom industry has been growing, albeit, at a subdued single-digit rate of 5.70% in the prior year, and a substantial 23.39% over the past five years. This means that any tailwind the industry is benefiting from, Sky andce Global has not been able to leverage it as much as its industry peers.

What does this mean?

Sky andce Global’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 predict what will occur going forward, and when. The most useful step is to assess company-specific issues Sky andce Global may be facing and whether management guidance has steadily been met in the past. You should continue to research Sky andce Global to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

  • 1. Future Outlook: What are well-informed industry analysts predicting for SAS’s future growth? Take a look at this free research report of analyst consensus for SAS’s outlook.
  • 2. Financial Health: Is SAS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
  • 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.