For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a 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. Check out our latest analysis for Nanoco Group
Did NANO’s recent EPS Growth beat the long-term trend and the industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze different stocks on a more comparable basis, using the latest information. Nanoco Group’s most recent bottom-line -£9.1M, which compared to last year’s level, has become less negative. Since these figures may be relatively short-term thinking, I’ve calculated an annualized five-year figure for NANO’s earnings, which stands at -£6.5M. This means that, Nanoco Group has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.We can further evaluate Nanoco Group’s loss by researching what’s going on in the industry along with within the company. Initially, I want to briefly look into the line items. Revenue growth over last couple of years has been negative at -18.63%. The key to profitability here is to make sure the company’s cost growth is well-managed. Looking at growth from a sector-level, the UK semiconductors and semiconductor equipment industry has been enduring some headwinds over the prior year, leading to an average earnings drop of -7.99%. This is a momentous change, given that the industry has been delivering a positive rate of 7.66%, on average, over the past five years. This suggests that any near-term headwind the industry is experiencing, Nanoco Group is relatively better-cushioned than its peers.
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 hard 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 dependably been met in the past. I suggest you continue to research Nanoco Group to get a better picture of the stock by looking at:
1. Financial Health: Is NANO’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.