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Investors with a long-term horizong may find it valuable to assess Delticom AG’s (XTRA:DEX) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Delticom is currently performing. View our latest analysis for Delticom
Was DEX’s recent earnings decline worse than the long-term trend and the industry?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to assess various companies in a uniform manner using the latest information. For Delticom, its latest earnings (trailing twelve month) is €1.46M, which, relative to the previous year’s level, has sunken by a non-trivial -69.15%. Given that these values are somewhat myopic, I’ve created an annualized five-year figure for DEX’s earnings, which stands at €13.39M This doesn’t seem to paint a better picture, since earnings seem to have consistently been falling over time.
Why is this? Well, let’s look at what’s transpiring with margins and whether the rest of the industry is facing the same headwind. Revenue growth over the last couple of years, has been positive, however earnings growth has been declining. This means Delticom has been growing expenses, which is harming margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the DE online retail industry has been growing, albeit, at a muted single-digit rate of 9.81% over the previous twelve months, and a substantial 22.16% over the last five years. This suggests that any uplift the industry is profiting from, Delticom has not been able to reap as much as its average peer.
What does this mean?
Delticom’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that endure a prolonged period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. I recommend you continue to research Delticom to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for DEX’s future growth? Take a look at our free research report of analyst consensus for DEX’s outlook.
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Financial Health: Is DEX’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.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.