Was Organto Foods Inc's (CVE:OGO) Earnings Decline A Part Of Broader Industry Downturn?

For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Organto Foods Inc's (TSXV:OGO) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for Organto Foods

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

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 method enables me to analyze various companies on a similar basis, using the most relevant data points. For Organto Foods, its most recent bottom-line is -CA$5.7M, which, in comparison to last year’s figure, has become more negative. Given that these values may be somewhat short-term, I have calculated an annualized five-year value for Organto Foods's net income, which stands at -CA$3.4M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been getting more and more negative over time.

Additionally, we can assess Organto Foods's loss by looking at what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -5.33%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the Canadian food industry has been growing its average earnings by double-digit 11.73% over the past twelve months, and 14.69% over the previous few years. This suggests that any uplift the industry is deriving benefit from, Organto Foods has not been able to realize the gains unlike its industry peers.

What does this mean?

Though Organto Foods's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Organto Foods may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Organto Foods to get a better picture of the stock by looking at:

1. Financial Health: Is OGO’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. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.