After reading Eurobrokers SA.’s (ATSE:EUBRK) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 Eurobrokers
Was EUBRK’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I 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 blend enables me to examine various companies on a more comparable basis, using the most relevant data points. For Eurobrokers, its most recent bottom-line (trailing twelve month) is -€1.09M, which, in comparison to the previous year’s level, has become more negative. Given that these figures are fairly nearsighted, I’ve computed an annualized five-year value for Eurobrokers’s net income, which stands at -€859.56K. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further assess Eurobrokers’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Eurobrokers has seen an annual decline in revenue of -11.12%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the GR insurance industry has been growing, albeit, at a muted single-digit rate of 9.91% over the prior year, and 8.40% over the past half a decade. This means whatever tailwind the industry is profiting from, Eurobrokers has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Eurobrokers may be facing and whether management guidance has dependably been met in the past. You should continue to research Eurobrokers to get a better picture of the stock by looking at: