Examining how PHSC plc (AIM:PHSC) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how PHSC is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its healthcare providers and services industry peers. View our latest analysis for PHSC
Could PHSC beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I 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 blend allows me to assess many different companies on a similar basis, using the most relevant data points. For PHSC, its latest earnings is -£0.4M, which, in comparison to the previous year’s level, has become less negative. Given that these values are fairly nearsighted, I have estimated an annualized five-year value for PHSC’s earnings, which stands at £0.1M.
We can further analyze PHSC’s loss by researching what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the past couple of years has increased by a mere 7.66%. Since top-line growth is also pretty stale the key to profitability in the future would be controlling costs. Scanning growth from a sector-level, the UK healthcare providers and services industry has been enduring some headwinds over the past twelve months, leading to an average earnings drop of -3.76%. This is a momentous change, given that the industry has constantly been delivering a a strong growth of 13.63% in the past five years. This means while PHSC is presently running a loss, whatever recent headwind the industry is enduring, the impact on PHSC has been softer relative to its peers.
What does this mean?
Though PHSC’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues PHSC may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research PHSC to get a better picture of the stock by looking at:
1. Financial Health: Is PHSC’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.