For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on TruScreen Limited (NZSE:TRU) useful as an attempt to give more color around how TruScreen is currently performing. View our latest analysis for TruScreen

Commentary On TRU’s Past Performance

I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to analyze different stocks in a uniform manner using the latest information. For TruScreen, its latest earnings (trailing twelve month) is -NZ$4.47M, which compared to the previous year’s figure, has become more negative. Since these figures are somewhat nearsighted, I’ve calculated an annualized five-year value for TruScreen’s earnings, which stands at -NZ$2.39M. 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 assess TruScreen’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years TruScreen has seen an annual decline in revenue of -10.24%, 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 NZ medical equipment industry has been growing, albeit, at a muted single-digit rate of 7.78% in the previous year, and 8.73% over the last five years. This suggests that any tailwind the industry is benefiting from, TruScreen has not been able to leverage it as much as its industry 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 envisage what will happen in the future and when. The most valuable step is to examine company-specific issues TruScreen may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research TruScreen to get a better picture of the stock by looking at:

1. Financial Health: Is TRU’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 31 March 2018. 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.