For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Amphion Innovations Plc (AIM:AMP) useful as an attempt to give more color around how Amphion Innovations is currently performing. Check out our latest analysis for Amphion Innovations
Did AMP’s recent earnings growth beat the long-term trend and the industry?
I prefer to use the ‘latest twelve-month’ data, 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 different stocks on a more comparable basis, using the most relevant data points. For Amphion Innovations, its most recent earnings (trailing twelve month) is -US$15.48M, which, relative to the previous year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I have calculated an annualized five-year value for AMP’s net income, which stands at -US$7.06M. This means Amphion Innovations has historically performed better than recently, while it seems like earnings are now heading back in the right direction again.
We can further analyze Amphion Innovations’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Amphion Innovations has seen an annual decline in revenue of -47.71%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 24.33% over the past year, and 17.78% over the past five years. This means while Amphion Innovations is currently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Amphion Innovations’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 occur going forward, and when. The most insightful step is to examine company-specific issues Amphion Innovations may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Amphion Innovations to get a better picture of the stock by looking at: