Examining how Alcanna Inc (TSE:CLIQ) 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 Alcanna is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its consumer retailing industry peers. Check out our latest analysis for Alcanna
Was CLIQ's weak performance lately a part of a long-term decline?CLIQ is loss-making, with the most recent trailing twelve-month earnings of -CA$1.13m (from 31 March 2018), which compared to last year has become more negative. Furthermore, the company's loss seem to be growing over time, with the five-year earnings average of -CA$3.00m. Each year, for the past five years CLIQ has seen an annual increase in operating expense growth, outpacing revenue growth of 1.52%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Eyeballing growth from a sector-level, the Canadian consumer retailing industry has been growing its average earnings by double-digit 35.21% over the past year, and a more subdued 3.53% over the last five years. This suggests that whatever tailwind the industry is deriving benefit from, Alcanna has not been able to realize the gains unlike its average peer.
Given that Alcanna is currently unprofitable, with operating expenses (opex) growing year-on-year at 2.74%, it may need to raise more cash over the next year. It currently has CA$62.05m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached CA$139.82m in the latest twelve months. Although this is a relatively simplistic calculation, and Alcanna may reduce its costs or open a new line of credit instead of issuing new equity shares, the analysis still helps us understand how sustainable the Alcanna’s operation is, and when things may have to change.
What does this mean?
Though Alcanna's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Alcanna may be facing and whether management guidance has consistently been met in the past. You should continue to research Alcanna to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CLIQ’s future growth? Take a look at our free research report of analyst consensus for CLIQ’s outlook.
- Financial Health: Is CLIQ’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.
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.