Are Earnings Prospects Improving For Loss-Making Gigas Hosting SA.'s (BME:GIGA)?

Understanding Gigas Hosting SA.'s (BME:GIGA) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Gigas Hosting is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period. View our latest analysis for Gigas Hosting

Commentary On GIGA's Past Performance

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 technique allows me to assess different companies on a similar basis, using the most relevant data points. For Gigas Hosting, its latest earnings (trailing twelve month) is -€648.94K, which compared to last year’s figure, has become less negative. Since these figures are fairly myopic, I have estimated an annualized five-year value for GIGA's net income, which stands at -€691.97K. This means while net income is negative, it has become less negative over the years.

We can further evaluate Gigas Hosting's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Gigas Hosting's top-line has increased by 77.27% on average, indicating that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the ES internet industry has been growing its average earnings by double-digit 15.39% in the past twelve months, and 18.62% over the past half a decade. This shows that whatever uplift the industry is deriving benefit from, Gigas Hosting has not been able to realize the gains unlike its average peer.

What does this mean?

Gigas Hosting'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 difficult to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Gigas Hosting may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Gigas Hosting to get a better picture of the stock by looking at:

• 1. Financial Health: Is GIGA’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 trailing twelve months from 31 December 2014. This may not be consistent with full year annual report figures.

If you're looking to trade Gigas Hosting, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.

With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.

Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.

Sponsored Content

New: Manage All Your Stock Portfolios in One Place

We've created the ultimate portfolio companion for stock investors, and it's free.

• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks

Try a Demo Portfolio for Free

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.