Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Creative Eye Limited's (NSEI:CREATIVEYE) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for Creative Eye
Was CREATIVEYE's weak performance lately a part of a long-term decline?
CREATIVEYE is loss-making, with the most recent trailing twelve-month earnings of -₹49.0m (from 31 December 2019), which compared to last year has become more negative. Furthermore, the company's loss seem to be growing over time, with the five-year earnings average of -₹15.8m. Each year, for the past five years CREATIVEYE has seen an annual increase in operating expense growth, outpacing revenue growth of 22%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Inspecting growth from a sector-level, the IN entertainment industry has been growing, albeit, at a muted single-digit rate of 5.9% over the previous year, and a substantial 31% over the previous five years. This growth is a median of profitable companies of 20 Entertainment companies in IN including Media Matrix Worldwide, Shalimar Productions and Baba Arts. This means that any tailwind the industry is benefiting from, Creative Eye has not been able to leverage it as much as its average peer.
Although Creative Eye is loss-making, its has a long cash runway to meet its upcoming operating expenses should this remain constant at the current level of ₹624k (SG&A and one-year R&D) . This is a strong indication of good cash management.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Creative Eye may be facing and whether management guidance has dependably been met in the past. You should continue to research Creative Eye to get a better picture of the stock by looking at:
- Financial Health: Are CREATIVEYE’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.
- Valuation: What is CREATIVEYE 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 CREATIVEYE is currently mispriced by the market.
- 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 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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