Understanding JustKapital Limited’s (ASX:JKL) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how JustKapital is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for JustKapital
How Well Did JKL Perform?
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to analyze different companies in a uniform manner using the latest information. JustKapital’s latest twelve-month earnings -A$2.6M, which, in comparison to the prior year’s figure, has become more negative. Given that these figures are fairly nearsighted, I’ve estimated an annualized five-year value for JKL’s earnings, which stands at -A$1.6M. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.
We can further analyze JustKapital’s loss by looking at what’s going on in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over the past few years has more than doubled, implying that JustKapital is in a high-growth period with expenses racing ahead elevated top-line growth rates. Inspecting growth from a sector-level, the Australian diversified financial services industry has been enduring some headwinds over the previous year, leading to an average earnings drop of -3.35%. This is a momentous change, given that the industry has constantly been delivering a a strong growth of 14.46% in the previous five years. This means any near-term headwind the industry is experiencing, it’s hitting JustKapital harder than its peers.
What does this mean?
JustKapital’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 forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues JustKapital may be facing and whether management guidance has dependably been met in the past. You should continue to research JustKapital to get a more holistic view of the stock by looking at:
1. Financial Health: Is JKL’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.