Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Model N Inc’s (NYSE:MODN) 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. Check out our latest analysis for Model N
Did MODN perform worse than its track record and industry?
I like to 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 allows me to analyze different stocks in a uniform manner using new information. For Model N, its most recent trailing-twelve-month earnings is -US$37.20M, which, in comparison to the previous year’s level, has become more negative. Since these figures are fairly myopic, I have calculated an annualized five-year value for MODN’s earnings, which stands at -US$19.32M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.We can further examine Model N’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Model N’s top-line has increased by a mere 7.92%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the US software industry has been growing its average earnings by double-digit 10.57% in the previous year, and 10.50% over the previous five years. This means any tailwind the industry is enjoying, Model N has not been able to gain as much as its industry peers.
What does this mean?
Though Model N’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 valuable step is to assess company-specific issues Model N may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Model N to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for MODN’s future growth? Take a look at our free research report of analyst consensus for MODN’s outlook.
- 2. Financial Health: Is MODN’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.