After reading Akritas SA.’s (ATSE:AKRIT) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Akritas
Did AKRIT beat its long-term earnings growth trend and its industry?
I look at 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 enables me to analyze different companies on a similar basis, using the latest information. For Akritas, its most recent bottom-line (trailing twelve month) is -€7.00M, which, in comparison to the previous year’s figure, has become less negative. Since these values are relatively short-term thinking, I’ve created an annualized five-year value for AKRIT’s earnings, which stands at -€9.62M. This means that, while net income is negative, it has become less negative over the years.We can further evaluate Akritas’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Akritas has seen an annual decline in revenue of -10.80%, 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 GR market industry has been growing its average earnings by double-digit 23.45% over the prior year, and 16.67% over the previous five years. This means that any uplift the industry is deriving benefit from, Akritas has not been able to leverage it as much as its industry peers.
What does this mean?
Though Akritas’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Akritas may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Akritas to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is AKRIT’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.