When Aylen Capital Inc’s (CNSX:AYL) announced its latest earnings (31 March 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Aylen Capital’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not AYL actually performed well. Below is a quick commentary on how I see AYL has performed. See our latest analysis for Aylen Capital
Commentary On AYL’s Past PerformanceAYL is loss-making, with the most recent trailing twelve-month earnings of -CA$109.41k (from 31 March 2018), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -CA$357.47k. Each year, for the past five years AYL has seen an annual increase in operating expense growth, outpacing revenue growth of 3.02%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Inspecting growth from a sector-level, the Canadian software industry has been growing, albeit, at a subdued single-digit rate of 9.30% over the previous twelve months, and a substantial 23.05% over the past five years. This shows that whatever tailwind the industry is benefiting from, Aylen Capital has not been able to realize the gains unlike its average peer.
Since Aylen Capital is currently unprofitable, with operating expenses (opex) growing year-on-year at 0.77%, it may need to raise more cash over the next year. It currently has CA$37.81k in cash and short-term investments, however, opex (SG&A and one-year R&D) reached CA$839.37k in the latest twelve months. Even though this is analysis is fairly basic, and Aylen Capital still can cut its overhead in the near future, or raise debt capital instead of coming to equity markets, the analysis still helps us understand how sustainable the Aylen Capital’s operation is, and when things may have to change.
What does this mean?
Aylen Capital’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Aylen Capital may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Aylen Capital to get a better picture of the stock by looking at:
- Financial Health: Is AYL’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.