For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Nanoco Group plc (LSE:NANO) useful as an attempt to give more color around how Nanoco Group is currently performing. See our latest analysis for Nanoco Group
Were NANO’s earnings stronger than its past performances and the industry?
To account for any quarterly or half-yearly updates, 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 allows me to assess many different companies in a uniform manner using the latest information. For Nanoco Group, its most recent earnings (trailing twelve month) is -UK£9.11M, which, relative to the prior year’s figure, has become less negative. Since these figures are somewhat short-term, I have computed an annualized five-year figure for Nanoco Group’s earnings, which stands at -UK£6.67M. This suggests that, Nanoco Group has historically performed better than recently, while it seems like earnings are now heading back towards a more favorable position once more.We can further analyze Nanoco Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Nanoco Group has seen an annual decline in revenue of -20.45%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the UK semiconductor industry has been enduring some headwinds over the past year, leading to an average earnings drop of -7.99%. This is a major change, given that the industry has been delivering a positive rate of 8.02%, on average, over the previous five years. This shows that even though Nanoco Group is presently unprofitable, any recent headwind the industry is experiencing, Nanoco Group is relatively better-cushioned than its peers.
What does this mean?
Though Nanoco Group’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Nanoco Group may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Nanoco Group to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Future Outlook: What are well-informed industry analysts predicting for NANO’s future growth? Take a look at this free research report of analyst consensus for NANO’s outlook.
- 2. Financial Health: Is NANO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.