Does Big Rock Brewery Inc's (TSE:BR) Past Performance Indicate A Weaker Future?

Assessing Big Rock Brewery Inc's (TSX:BR) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BR's recent performance announced on 30 December 2017 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for Big Rock Brewery

Was BR's recent earnings decline indicative of a tough track record?

I prefer to use the ‘latest twelve-month’ data, 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 analyze many different companies on a similar basis, using the most relevant data points. For Big Rock Brewery, its most recent bottom-line (trailing twelve month) is -CA$1.02M, which compared to last year’s level, has become more negative. Since these figures are fairly short-term, I have estimated an annualized five-year figure for BR's earnings, which stands at CA$1.32M.

We can further evaluate Big Rock Brewery's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Big Rock Brewery's revenue growth has been somewhat unexciting, with an annual growth rate of -0.77%, on average. The company's inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the Canadian beverage industry has been enduring some headwinds in the prior year, leading to an average earnings drop of -11.02%. This is a major change, given that the industry has constantly been delivering a a solid growth of 14.00% in the previous five years. This suggests that whatever recent headwind the industry is facing, it’s hitting Big Rock Brewery harder than its 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 Big Rock Brewery may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Big Rock Brewery to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is BR’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 BR 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 BR 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 December 2017. This may not be consistent with full year annual report figures.

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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.