Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Connexion Media Limited’s (ASX:CXZ) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Connexion Media
Commentary On CXZ’s Past Performance
I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to examine different companies in a uniform manner using the most relevant data points. For Connexion Media, its most recent earnings is -A$4.0M, which compared to the prior year’s figure, has become less negative. Since these figures are fairly short-term, I’ve created an annualized five-year value for Connexion Media’s net income, which stands at -A$5.6M. This means that, while net income is negative, it has become less negative over the years.
Additionally, we can analyze Connexion Media’s loss by researching what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last few years has grown by 92.90%, signalling that Connexion Media is in a high-growth period with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the Australian software industry has been growing its average earnings by double-digit 15.42% in the prior twelve months, and 12.47% over the previous few years. This means while Connexion Media is presently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Connexion Media’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 hard to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Connexion Media may be facing and whether management guidance has consistently been met in the past. You should continue to research Connexion Media to get a better picture of the stock by looking at:
1. Financial Health: Is CXZ’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.