Analyzing PCI-PAL PLC’s (AIM:PCIP) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess PCIP’s recent performance announced on 31 December 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for PCI-PAL
Was PCIP’s recent earnings decline worse than the long-term trend and the industry?
I prefer 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 blend enables me to analyze different companies on a more comparable basis, using the latest information. For PCI-PAL, its latest trailing-twelve-month earnings is -UK£2.71M, which, relative to the prior year’s figure, has become more negative. Given that these values may be fairly short-term, I’ve determined an annualized five-year value for PCIP’s net income, which stands at -UK£347.49K. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.We can further analyze PCI-PAL’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years PCI-PAL has seen an annual decline in revenue of -18.42%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the UK it industry has been growing, albeit, at a muted single-digit rate of 5.65% in the previous twelve months, and a substantial 20.92% over the past five. This means whatever tailwind the industry is profiting from, PCI-PAL has not been able to leverage it as much as its industry peers.
What does this mean?
PCI-PAL’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most useful step is to assess company-specific issues PCI-PAL may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research PCI-PAL to get a better picture of the stock by looking at:
- 1. Financial Health: Is PCIP’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.