Does Soho Development SA.'s (WSE:SHD) Past Performance Indicate A Weaker Future?

March 12, 2018

Examining Soho Development SA.'s (WSE:SHD) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess SHD's latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. Check out our latest analysis for Soho Development

How Well Did SHD Perform?

For the most up-to-date info, 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 enables me to assess different stocks in a uniform manner using new information. For Soho Development, its most recent bottom-line (trailing twelve month) is -ZŁ3.94M, which, in comparison to the prior year's level, has turned from positive to negative. Since these figures are relatively myopic, I have created an annualized five-year figure for SHD's earnings, which stands at -ZŁ8.03M. This means that, though net income is negative, it has become less negative over the years.

We can further examine Soho Development's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Soho Development has seen an annual decline in revenue of -7.02%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the PL capital markets industry has been growing its average earnings by double-digit 12.77% in the past year, and 14.73% over the past five. This suggests that any uplift the industry is profiting from, Soho Development has not been able to realize the gains unlike its average peer.

What does this mean?

Though Soho Development'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 predict what will happen in the future and when. The most useful step is to assess company-specific issues Soho Development may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Soho Development to get a more holistic view of the stock by looking at:

1. Financial Health: Is SHD’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.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 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.