After looking at Rosslyn Data Technologies plc's (AIM:RDT) latest earnings announcement (31 October 2017), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Rosslyn Data Technologies's performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Rosslyn Data Technologies
Commentary On RDT's Past Performance
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 method allows me to analyze various companies on a similar basis, using new information. For Rosslyn Data Technologies, its latest earnings (trailing twelve month) is -UK£2.41M, which, relative to the prior year's level, has become more negative. Since these figures are somewhat short-term, I have created an annualized five-year figure for RDT's net income, which stands at -UK£2.35M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.We can further evaluate Rosslyn Data Technologies's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Rosslyn Data Technologies's top-line has grown by 19.24% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the UK software industry has been growing its average earnings by double-digit 24.31% over the past year, and a more muted 6.09% over the past half a decade. This means whatever uplift the industry is enjoying, Rosslyn Data Technologies has not been able to realize the gains unlike its industry peers.
What does this mean?
Rosslyn Data Technologies'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 valuable step is to examine company-specific issues Rosslyn Data Technologies may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Rosslyn Data Technologies to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is RDT’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. Valuation: What is RDT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RDT is currently mispriced by the market.
- 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.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.