Measuring Tanfield Group plc’s (AIM:TAN) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess TAN’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. See our latest analysis for Tanfield Group
Commentary On TAN’s Past Performance
I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to assess different companies in a uniform manner using new information. For Tanfield Group, its latest twelve-month earnings is -£0.2M, which, relative to the previous year’s figure, has become less negative. Since these figures may be fairly short-term, I have created an annualized five-year figure for TAN’s earnings, which stands at -£6.0M. This means that, even though net income is negative, it has become less negative over the years.We can further evaluate Tanfield Group’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -48.23%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 22.59% in the prior year, and 13.06% over the past five years. This means though Tanfield Group is currently unprofitable, 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. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Tanfield Group may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Tanfield Group to get a better picture of the stock by looking at:
1. Financial Health: Is TAN’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.