Stock Analysis

Where Sato office and Houseware supplies SA (ATH:SATOK) Stands In Earnings Growth Against Its Industry

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Today I will examine Sato office and Houseware supplies SA's (ATSE:SATOK) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of SATOK's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Sato office and Houseware supplies

Were SATOK's earnings stronger than its past performances and the industry?

I use the ‘latest twelve-month’ data, 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 blend enables me to assess various companies on a similar basis, using the latest information. For Sato office and Houseware supplies, its most recent trailing-twelve-month earnings is -€2.20M, which compared to the prior year's figure, has become less negative. Since these figures are relatively nearsighted, I’ve determined an annualized five-year value for SATOK's net income, which stands at -€8.98M. This suggests that, though net income is negative, it has become less negative over the years.

ATSE:SATOK Income Statement Mar 13th 18
ATSE:SATOK Income Statement Mar 13th 18
We can further assess Sato office and Houseware supplies's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Sato office and Houseware supplies has seen an annual decline in revenue of -23.94%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the GR commercial services industry has been growing, albeit, at a muted single-digit rate of 5.74% over the prior year, and 9.29% over the last five years. This means that, though Sato office and Houseware supplies is presently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.

What does this mean?

Though Sato office and Houseware supplies's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Sato office and Houseware supplies may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Sato office and Houseware supplies to get a better picture of the stock by looking at:

  • 1. Financial Health: Is SATOK’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 SATOK 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 SATOK 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.
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.

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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.