Assessing AuMake International Limited’s (ASX:AU8) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess AU8’s recent performance announced on 30 June 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for AuMake International

Was AU8’s weak performance lately a part of a long-term decline?

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 analyze many different companies in a uniform manner using the latest information. For AuMake International, its most recent bottom-line (trailing twelve month) is -AU$253.67K, which compared to the previous year’s figure, has turned from positive to negative. Given that these values are fairly nearsighted, I have determined an annualized five-year figure for AuMake International’s net income, which stands at -AU$1.12M. This suggests that, though net income is negative, it has become less negative over the years.

We can further evaluate AuMake International’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade AuMake International has seen an annual decline in revenue of -19.20%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the Australian specialty retail industry has been growing, albeit, at a unexciting single-digit rate of 4.37% over the past year, and 4.48% over the previous five years. This means whatever near-term headwind the industry is experiencing, it’s hitting AuMake International harder than its peers.

What does this mean?

Though AuMake International’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most useful step is to examine company-specific issues AuMake International may be facing and whether management guidance has steadily been met in the past. You should continue to research AuMake International to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is AU8’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. 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 30 June 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.