Understanding how CPT Global Limited (ASX:CGO) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how CPT Global is doing by comparing its latest earnings with its long-term trend as well as the performance of its it services industry peers. See our latest analysis for CPT Global
Were CGO’s earnings stronger than its past performances and the industry?
I prefer to use data from the most recent 12 months, 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 method enables me to assess many different companies in a uniform manner using new information. CPT Global’s most recent bottom-line -A$1.5M, which, against the prior year’s figure, has become less negative. Given that these figures may be somewhat short-term thinking, I have created an annualized five-year figure for CPT Global’s earnings, which stands at -A$0.9M. This suggests that, CPT Global has historically performed better than recently, although it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate CPT Global’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 been negative at -6.02%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the Australian it services industry has been growing its average earnings by double-digit 16.41% in the past twelve months, and 19.63% over the past five years. This means even though CPT Global is presently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
CPT Global’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 difficult to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues CPT Global may be facing and whether management guidance has steadily been met in the past. You should continue to research CPT Global to get a better picture of the stock by looking at:
1. Financial Health: Is CGO’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.