Stock Analysis

Ecolomondo Corporation (CVE:ECM): Did It Outperform The Industry?

TSXV:ECM
Source: Shutterstock

Examining how Ecolomondo Corporation (TSXV:ECM) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Ecolomondo is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its commercial services industry peers. View our latest analysis for Ecolomondo

Did ECM's recent performance beat its trend and industry?

I look at 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 technique enables me to examine different stocks on a similar basis, using the most relevant data points. For Ecolomondo, its most recent bottom-line (trailing twelve month) is -CA$1.38M, which, relative to the prior year's level, has become less negative. Since these values are somewhat short-term, I’ve estimated an annualized five-year value for Ecolomondo's net income, which stands at -CA$1.37M. This shows that, Ecolomondo has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.

TSXV:ECM Income Statement Apr 13th 18
TSXV:ECM Income Statement Apr 13th 18
We can further examine Ecolomondo's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Ecolomondo has seen an annual decline in revenue of -21.42%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Canadian commercial services industry has been growing its average earnings by double-digit 12.93% over the previous twelve months, and 32.18% over the last five years. This shows that any uplift the industry is enjoying, Ecolomondo has not been able to reap as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Ecolomondo may be facing and whether management guidance has consistently been met in the past. You should continue to research Ecolomondo to get a better picture of the stock by looking at:

  • 1. Financial Health: Is ECM’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. Valuation: What is ECM 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 ECM is currently mispriced by the market.
  • 3. 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 trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.

Valuation is complex, but we're helping make it simple.

Find out whether Ecolomondo is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.