Analyzing Love Group Global Ltd’s (ASX:LVE) 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 LVE’s recent performance announced on 30 June 2017 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for Love Group Global
Despite a decline, did LVE underperform the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to analyze different companies on a more comparable basis, using new information. For Love Group Global, its latest twelve-month earnings is -A$3.5M, which, in comparison to last year’s level, has become more negative. Since these values may be somewhat short-term, I’ve calculated an annualized five-year figure for Love Group Global’s net income, which stands at -A$2.0M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
We can further analyze Love Group Global’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -2.47%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at growth from a sector-level, the Australian software industry has been growing its average earnings by double-digit 15.42% in the past twelve months, and 12.47% over the previous few years. This suggests that any tailwind the industry is profiting from, Love Group Global has not been able to gain as much as its industry peers.
What does this mean?
Love Group Global’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 hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Love Group Global may be facing and whether management guidance has dependably been met in the past. You should continue to research Love Group Global to get a more holistic view of the stock by looking at:
1. Financial Health: Is LVE’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.