In this commentary, I will examine Porta Communications Plc’s (AIM:PTCM) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the media industry performed. As an investor, I find it beneficial to assess PTCM’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Porta Communications
Was PTCM’s recent earnings decline indicative of a tough track record?
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 blend allows me to examine many different companies on a more comparable basis, using the latest information. For Porta Communications, its latest twelve-month earnings is -£6.3M, which, in comparison to the prior year’s figure, has become more negative. Given that these values may be fairly myopic, I have computed an annualized five-year value for Porta Communications’s earnings, which stands at -£2.8M. 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 assess Porta Communications’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past couple of years has increased by 40.55%, indicating that Porta Communications is in a high-growth period with expenses racing ahead elevated top-line growth rates, leading to yearly losses. Viewing growth from a sector-level, the UK media industry has been enduring some headwinds in the prior year, leading to an average earnings drop of -6.09%. This is a momentous change, given that the industry has been delivering a positive rate of 8.75%, on average, over the past couple of years. This means that whatever recent headwind the industry is experiencing, it’s hitting Porta Communications harder than its peers.
What does this mean?
Porta Communications’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Porta Communications may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Porta Communications to get a more holistic view of the stock by looking at: