When Deinove SA (ENXTPA:ALDEI) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Deinove performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see ALDEI has performed. See our latest analysis for Deinove
How Well Did ALDEI Perform?
For the most up-to-date info, I 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 blend enables me to examine different companies on a more comparable basis, using the most relevant data points. For Deinove, its latest earnings (trailing twelve month) is -€7.33M, which, in comparison to the previous year’s figure, has become more negative. Since these values are relatively nearsighted, I have determined an annualized five-year figure for ALDEI’s net income, which stands at -€4.82M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further assess Deinove’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Deinove has seen an annual decline in revenue of -3.50%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the FR chemicals industry has been growing its average earnings by double-digit 16.23% in the prior year, and 11.69% over the last five years. This suggests that any tailwind the industry is enjoying, Deinove has not been able to realize the gains unlike its average peer.
What does this mean?
Deinove’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 envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Deinove may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Deinove to get a more holistic view of the stock by looking at:
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Financial Health: Is ALDEI’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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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.
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.