Today I will take a look at Aquis Entertainment Limited’s (ASX:AQS) most recent earnings update (30 June 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the hospitality industry performed. As an investor, I find it beneficial to assess AQS’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Aquis Entertainment
How Did AQS’s Recent Performance Stack Up Against Its Past?
For the purpose of this commentary, I like to use 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 allows me to examine many different companies in a uniform manner using new information. Aquis Entertainment’s latest twelve-month earnings -A$7.9M, which, relative to the prior year’s figure, has become more negative. Given that these values are relatively short-term thinking, I have computed an annualized five-year figure for Aquis Entertainment’s net income, which stands at -A$5.1M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can analyze Aquis Entertainment’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last few years has grown by a mere 8.41%. Since top-line growth is also pretty stale the key to profitability going forward would be controlling costs. Viewing growth from a sector-level, the Australian hospitality industry has been growing, albeit, at a muted single-digit rate of 9.37% over the prior year, and 9.52% over the previous five years. This suggests that any uplift the industry is enjoying, Aquis Entertainment has not been able to realize the gains unlike its industry peers.
What does this mean?
Aquis Entertainment’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 predict what will happen in the future and when. The most useful step is to assess company-specific issues Aquis Entertainment may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Aquis Entertainment to get a better picture of the stock by looking at: