Today I will examine Aeeris Limited’s (ASX:AER) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of AER’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Aeeris

How Did AER’s Recent Performance Stack Up Against Its Past?

For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze various companies in a uniform manner using the latest information. For Aeeris, its most recent twelve-month earnings is -A$2.0M, which compared to the previous year’s figure, has become more negative. Since these values may be relatively myopic, I’ve estimated an annualized five-year figure for AER’s earnings, which stands at -A$1.1M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.

Additionally, we can examine Aeeris’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has risen by 22.99%, indicating that Aeeris is in a high-growth phase with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the Australian internet software and services industry has been relatively flat in terms of earnings growth over the last couple of years. This means that any near-term headwind the industry is experiencing, it’s hitting Aeeris harder than its peers.

What does this mean?

Aeeris’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 forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Aeeris may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Aeeris to get a better picture of the stock by looking at:

1. Financial Health: Is AER’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.

2. Valuation: What is AER worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AER is currently mispriced by the market.

3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.