After looking at Real Estate Investar Group Limited’s (ASX:REV) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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. See our latest analysis for Real Estate Investar Group
Despite a decline, did REV underperform the long-term trend and the industry?
For the most up-to-date info, 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 technique enables me to analyze different companies in a uniform manner using the latest information. For Real Estate Investar Group, its latest twelve-month earnings is -A$2.2M, which compared to last year’s figure, has become more negative. Given that these figures are somewhat nearsighted, I’ve calculated an annualized five-year value for Real Estate Investar Group’s earnings, which stands at -A$1.3M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been getting more and more negative over time.
We can further analyze Real Estate Investar Group’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past few years has risen by a mere 8.52%. Given that top-line growth is also pretty stale the key to profitability in the future would be controlling costs. Inspecting growth from a sector-level, the Australian internet software and services industry has been relatively flat in terms of earnings growth over the past couple of years. This means that whatever recent headwind the industry is experiencing, it’s hitting Real Estate Investar Group harder than its peers.
What does this mean?
Real Estate Investar Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Real Estate Investar Group may be facing and whether management guidance has dependably been met in the past. You should continue to research Real Estate Investar Group to get a better picture of the stock by looking at: