Does The ExOne Company’s (NASDAQ:XONE) -37.12% Earnings Drop Reflect A Longer Term Trend?

After looking at The ExOne Company’s (NASDAQ:XONE) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether ExOne’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for ExOne

Despite a decline, did XONE underperform the long-term trend and the 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 method enables me to assess many different companies in a uniform manner using the most relevant data points. For ExOne, its latest earnings (trailing twelve month) is -US$20.02M, which, in comparison to the prior year’s figure, has become more negative. Given that these figures are fairly short-term thinking, I have estimated an annualized five-year value for ExOne’s earnings, which stands at -US$16.68M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been getting more and more negative over time.

NasdaqGS:XONE Income Statement May 10th 18
NasdaqGS:XONE Income Statement May 10th 18
We can further evaluate ExOne’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade ExOne’s top-line has risen by 12.25% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 24.30% in the prior twelve months, and a less exciting 4.45% over the previous five years. This shows that whatever tailwind the industry is benefiting from, ExOne has not been able to realize the gains unlike its average peer.

What does this mean?

ExOne’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to assess company-specific issues ExOne may be facing and whether management guidance has regularly been met in the past. You should continue to research ExOne to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for XONE’s future growth? Take a look at our free research report of analyst consensus for XONE’s outlook.
  2. Financial Health: Is XONE’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.
  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 31 December 2017. This may not be consistent with full year annual report figures.