When MODE SA. (WSE:MOE) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were MODE’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not MOE actually performed well. Below is a quick commentary on how I see MOE has performed. See our latest analysis for MODE
How Well Did MOE Perform?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to analyze many different companies on a similar basis, using the most relevant data points. For MODE, its most recent trailing-twelve-month earnings is -ZŁ144.77K, which compared to the previous year’s level, has become less negative. Since these values may be relatively nearsighted, I’ve created an annualized five-year figure for MOE’s earnings, which stands at ZŁ113.82K.We can further assess MODE’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade MODE’s top-line has grown by 15.56% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the PL electronic industry has been growing its average earnings by double-digit 27.63% over the past twelve months, and a more subdued 5.24% over the past five years. This means that, while MODE is currently unprofitable, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
MODE’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues MODE may be facing and whether management guidance has dependably been met in the past. You should continue to research MODE to get a better picture of the stock by looking at:
- 1. Financial Health: Is MOE’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 MOE 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 MOE 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.