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Analyzing Litho Formas SA.’s (ENXTLS:LIT) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess LIT’s recent performance announced on 31 December 2016 and compare these figures to its long-term trend and industry movements. View our latest analysis for Litho Formas
Was LIT’s recent earnings decline indicative of a tough track record?
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 assess various companies on a similar basis, using new information. For Litho Formas, its most recent bottom-line (trailing twelve month) is -€108.73K, which, against last year’s figure, has turned from positive to negative. Since these figures are fairly myopic, I have determined an annualized five-year value for LIT’s net income, which stands at -€94.37K. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Litho Formas’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Litho Formas has seen an annual decline in revenue of -16.59%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the PT commercial services industry has been growing, albeit, at a subdued single-digit rate of 8.60% in the previous year, and 9.00% over the past five. This shows that whatever tailwind the industry is deriving benefit from, Litho Formas has not been able to reap as much as its industry peers.
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 occur going forward, and when. The most useful step is to assess company-specific issues Litho Formas may be facing and whether management guidance has steadily been met in the past. You should continue to research Litho Formas to get a more holistic view of the stock by looking at:
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Financial Health: Is LIT’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.
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Valuation: What is LIT 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 LIT is currently mispriced by the market.
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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 2016. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.