After reading Mobilicom Limited’s (ASX:MOB) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Mobilicom
Was MOB’s weak performance lately a part of a long-term decline?
I like to 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 technique enables me to assess various companies on a similar basis, using the latest information. For Mobilicom, the most recent bottom-line -A$4.7M, which, relative to the prior year’s figure, has become more negative. Given that these values may be somewhat short-term, I have estimated an annualized five-year figure for Mobilicom’s net income, which stands at -A$3.4M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
We can further evaluate Mobilicom’s loss by looking at what’s going on in the industry along with within the company. First, I want to quickly look into the line items. Revenue growth over past couple of years has grown by a mere 5.96%. Since top-line growth is also pretty stale the key to profitability going forward would be managing cost growth rates. Eyeballing growth from a sector-level, the Australian communications equipment industry has been enduring severe headwinds over the past year, leading to an average earnings drop of -32.88%. This is a significant change, given that the industry has constantly been delivering a a robust growth of 17.07% in the past five years. This means any near-term headwind the industry is facing, it’s hitting Mobilicom harder than its peers.
What does this mean?
Though Mobilicom’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Mobilicom may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Mobilicom to get a more holistic view of the stock by looking at: