After reading Identiv Inc’s (NASDAQ:INVE) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether INVE has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Identiv
How INVE fared against its long-term earnings performance and its industry
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 method allows me to examine different stocks on a similar basis, using the most relevant data points. Identiv’s latest earnings -$4.7M, which, relative to the previous year’s figure, has become less negative. Given that these figures may be relatively short-term, I’ve created an annualized five-year value for Identiv’s net income, which stands at -$19.5M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further analyze Identiv’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over last few years has been negative at -8.04%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the US electronic equipment, instruments and components industry has been growing its average earnings by double-digit 22.40% in the past twelve months, and 10.20% over the previous few years. This means while Identiv is currently unprofitable, it may have been aided by industry tailwinds, moving earnings in the right direction.
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 valuable step is to assess company-specific issues Identiv may be facing and whether management guidance has consistently been met in the past. You should continue to research Identiv to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for INVE’s future growth? Take a look at our free research report of analyst consensus for INVE’s outlook.