For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Actua Corporation’s (NASDAQ:ACTA) 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 Actua
How Well Did ACTA Perform?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 enables me to assess different stocks on a more comparable basis, using new information. Actua’s latest twelve-month earnings -$24.0M, which, against the previous year’s figure, has become less negative. Since these values are relatively short-term thinking, I’ve determined an annualized five-year figure for ACTA’s net income, which stands at -$18.4M. This means Actua has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further analyze Actua’s loss by looking at what has been happening in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over last couple of years has risen by a mere 2.18%. Since top-line growth is also pretty stale the key to profitability moving forward would be controlling cost growth rates. Scanning growth from a sector-level, the US internet industry has been growing, albeit, at a unexciting single-digit rate of 7.42% in the previous twelve months, and a substantial 15.52% over the previous few years. This shows that, while Actua is presently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will happen in the future and when. The most insightful step is to assess company-specific issues Actua may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Actua to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ACTA’s future growth? Take a look at our free research report of analyst consensus for ACTA’s outlook.
2. Financial Health: Is ACTA’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.