Stock Analysis

Did Ecoslops SA.'s (EPA:ALESA) Recent Earnings Growth Beat The Trend?

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After looking at Ecoslops SA.'s (ENXTPA:ALESA) latest earnings update (30 June 2017), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for Ecoslops

Did ALESA beat its long-term earnings growth trend and its industry?

I 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 method enables me to examine various companies on a more comparable basis, using the latest information. For Ecoslops, its most recent trailing-twelve-month earnings is -€1.46M, which, against last year’s figure, has become less negative. Given that these figures are somewhat short-term, I’ve computed an annualized five-year value for Ecoslops's earnings, which stands at -€3.36M. This shows that, even though net income is negative, it has become less negative over the years.

ENXTPA:ALESA Income Statement Mar 11th 18
ENXTPA:ALESA Income Statement Mar 11th 18
We can further assess Ecoslops's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Ecoslops's top-line has increased by 31.56% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the FR commercial services industry has been growing, albeit, at a muted single-digit rate of 8.02% in the past twelve months, and 5.01% over the previous five years. This means even though Ecoslops is presently running a loss, it may have been aided by industry tailwinds, moving earnings into a more favorable position.

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 difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Ecoslops may be facing and whether management guidance has steadily been met in the past. You should continue to research Ecoslops to get a more holistic view of the stock by looking at:

  • 1. Financial Health: Is ALESA’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 30 June 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.