Assessing REFFIND Ltd’s (ASX:RFN) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how REFFIND is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its software industry peers. Check out our latest analysis for REFFIND
Did RFN’s recent earnings growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, 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 method enables me to examine different companies on a more comparable basis, using the latest information. For REFFIND, its latest trailing-twelve-month earnings is -AU$1.23M, which compared to last year’s figure, has become less negative. Given that these figures are relatively short-term, I’ve estimated an annualized five-year figure for REFFIND’s net income, which stands at -AU$4.20M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further assess REFFIND’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years REFFIND’s top-line has risen by 38.23% on average, indicating that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Eyeballing growth from a sector-level, the Australian software industry has been growing its average earnings by double-digit 13.49% in the past twelve months, and 15.19% over the past half a decade. This means that, even though REFFIND is currently loss-making, it may have benefited from industry tailwinds, moving earnings towards to 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 forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues REFFIND may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research REFFIND to get a more holistic view of the stock by looking at:
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Financial Health: Is RFN’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.