Does Earthport plc’s (LON:EPO) Past Performance Indicate A Weaker Future?

Measuring Earthport plc’s (AIM:EPO) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess EPO’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Earthport

Commentary On EPO’s Past Performance

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 technique enables me to analyze many different companies on a similar basis, using new information. For Earthport, its latest earnings (trailing twelve month) is -£12.1M, which, in comparison to the previous year’s figure, has become more negative. Given that these figures may be somewhat nearsighted, I’ve calculated an annualized five-year value for EPO’s net income, which stands at -£8.3M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.

AIM:EPO Income Statement Jan 22nd 18
AIM:EPO Income Statement Jan 22nd 18
We can further examine Earthport’s loss by looking at what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the past few years has increased by 39.34%, signalling that Earthport is in a high-growth phase with expenses racing ahead high top-line growth rates, leading to yearly losses. Inspecting growth from a sector-level, the UK it industry has been growing its average earnings by double-digit 23.24% over the past year, and 21.72% over the past couple of years. This suggests that any uplift the industry is enjoying, Earthport has not been able to reap as much as its average peer.

What does this mean?

Earthport’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 envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Earthport may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Earthport to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for EPO’s future growth? Take a look at our free research report of analyst consensus for EPO’s outlook.

2. Financial Health: Is EPO’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.

3. 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.