Measuring Harris Technology Group Limited’s (ASX:HT8) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess HT8’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Harris Technology Group
Was HT8’s recent earnings decline worse than the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to assess many different companies in a uniform manner using the most relevant data points. For Harris Technology Group, the latest earnings -A$2.8M, which compared to the previous year’s figure, has become more negative. Since these values are relatively nearsighted, I’ve determined an annualized five-year figure for HT8’s earnings, which stands at -A$2.5M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further examine Harris Technology Group’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 last couple of years has grown by 13.68%, implying that Harris Technology Group is in a high-growth period with expenses shooting ahead of elevated top-line growth rates. Eyeballing growth from a sector-level, the Australian internet and direct marketing retail industry has been multiplying average earnings growth of 65.69% over the past year, and a strong 21.89% over the past five years. This shows that any tailwind the industry is profiting from, Harris Technology Group has not been able to reap as much as its industry peers.
What does this mean?
Though Harris Technology Group’s past data is helpful, it is only one aspect of my investment thesis. 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 Harris Technology Group may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Harris Technology Group to get a better picture of the stock by looking at:
1. Financial Health: Is HT8’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.