Measuring Big Un Limited’s (ASX:BIG) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess BIG’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for Big Un
How Did BIG’s Recent Performance Stack Up Against Its Past?
I look at 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 technique allows me to assess different companies on a more comparable basis, using new information. For Big Un, the most recent bottom-line -A$4.2M, which, in comparison to the prior year’s level, has become less negative. Since these figures are fairly short-term thinking, I have calculated an annualized five-year figure for BIG’s net income, which stands at -A$4.7M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
Additionally, we can evaluate Big Un’s loss by looking at what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last few years has grown by 97.40%, signalling that Big Un is in a high-growth period with expenses shooting ahead of elevated top-line growth rates. Scanning growth from a sector-level, the Australian internet software and services industry has been relatively flat in terms of earnings growth over the last couple of years. This means any recent headwind the industry is enduring, the impact on Big Un has been softer relative to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Big Un may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Big Un to get a more holistic view of the stock by looking at:
1. Financial Health: Is BIG’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.
2. Valuation: What is BIG 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 BIG is currently mispriced by the market.