In This Article:
Examining ASF Group Limited’s (ASX:AFA) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AFA’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. Check out our latest analysis for ASF Group
Were AFA’s earnings stronger than its past performances and the industry?
To account for any quarterly or half-yearly updates, 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 technique enables me to examine different stocks in a uniform manner using new information. For ASF Group, its latest earnings (trailing twelve month) is -AU$6.76M, which compared to last year’s level, has become less negative. Since these values may be somewhat short-term thinking, I have estimated an annualized five-year value for ASF Group’s net income, which stands at -AU$7.87M. This means although net income is negative, it has become less negative over the years.
We can further evaluate ASF Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade ASF Group’s top-line has risen by 10.46% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the Australian diversified financial industry has been relatively flat in terms of earnings growth over the past few years. This suggests that while ASF Group is presently loss-making, whatever recent headwind the industry is facing, the impact on ASF Group has been softer relative to its 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 occur going forward, and when. The most insightful step is to assess company-specific issues ASF Group may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research ASF Group to get a better picture of the stock by looking at:
-
Financial Health: Is AFA’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.
-
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.