With A -7.7% Earnings Drop, Did Travel Technology Interactive (EPA:ALTTI) Really Underperform?

Understanding how Travel Technology Interactive (EPA:ALTTI) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Travel Technology Interactive is doing by comparing its latest earnings with its long-term trend as well as the performance of its software industry peers.

See our latest analysis for Travel Technology Interactive

Commentary On ALTTI’s Past Performance

ALTTI is loss-making, with the most recent trailing twelve-month earnings of -€295.0k (from 30 June 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 -€1.6m. Each year, for the past five years ALTTI has seen an annual decline in revenue of -11%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.

Scanning growth from a sector-level, the FR software industry has been growing its average earnings by double-digit 16% over the previous twelve months,

ENXTPA:ALTTI Income Statement Export December 7th 18
ENXTPA:ALTTI Income Statement Export December 7th 18

Given that Travel Technology Interactive is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -19%, the company’s current cash level (€523k) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Although this is a relatively simplistic calculation, and Travel Technology Interactive may continue to reduce its costs further or raise debt capital instead of coming to equity markets, the outcome of this analysis still helps us understand how sustainable the Travel Technology Interactive’s operation is, and when things may have to change.

What does this mean?

Travel Technology Interactive’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 predict what will happen in the future and when. The most valuable step is to assess company-specific issues Travel Technology Interactive may be facing and whether management guidance has dependably been met in the past. You should continue to research Travel Technology Interactive to get a better picture of the stock by looking at:

  1. Financial Health: Are ALTTI’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 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.