For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at NFON AG’s (DB:NFN) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for NFON
Commentary On NFN’s Past Performance
I prefer to use 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 analyze different companies on a more comparable basis, using the latest information. For NFON, its latest trailing-twelve-month earnings is -€2.02M, which, relative to the previous year’s figure, has become more negative. Given that these figures may be relatively myopic, I have created an annualized five-year value for NFON’s earnings, which stands at -€3.24M. This shows that, even though net income is negative, it has become less negative over the years.We can further analyze NFON’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade NFON’s top-line has increased by 25.34% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the DE telecom industry has been growing its average earnings by double-digit 14.53% in the past twelve months, and a more muted 8.18% over the past half a decade. This suggests that any tailwind the industry is benefiting from, NFON has not been able to realize the gains unlike its average peer.
What does this mean?
Though NFON’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues NFON may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research NFON to get a more holistic view of the stock by looking at:
- Financial Health: Is NFN’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.