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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Dubber Corporation Limited (ASX:DUB) useful as an attempt to give more color around how Dubber is currently performing. See our latest analysis for Dubber

Was DUB’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 allows me to analyze many different companies in a uniform manner using the latest information. For Dubber, its latest earnings (trailing twelve month) is -AU$9.85M, which compared to the previous year’s figure, has become more negative. Since these figures may be somewhat short-term thinking, I’ve determined an annualized five-year figure for DUB’s net income, which stands at -AU$3.44M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been getting more and more negative over time.

We can further examine Dubber’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Dubber’s top-line has grown by 37.06% on average, signalling that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the Australian internet industry has been growing, albeit, at a unexciting single-digit rate of 7.79% in the prior year, and 7.03% over the last five years. This suggests that whatever tailwind the industry is profiting from, Dubber has not been able to reap as much as its average peer.

What does this mean?

Though Dubber’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Dubber may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Dubber to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is DUB’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.