Measuring Velpic Limited’s (ASX:VPC) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess VPC’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Velpic

Commentary On VPC’s Past Performance

I use data from the most recent 12 months, 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 method allows me to assess different companies on a more comparable basis, using the most relevant data points. For Velpic, its most recent earnings (trailing twelve month) is -AU$8.44M, which, against last year’s figure, has become more negative. Given that these values may be somewhat myopic, I have created an annualized five-year figure for VPC’s earnings, which stands at -AU$4.30M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.

We can further evaluate Velpic’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Velpic’s top-line has risen by 47.65% on average, indicating 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 internet industry has been growing its average earnings by double-digit 15.92% over the past twelve months, and 10.24% over the last five years. This suggests that whatever uplift the industry is benefiting from, Velpic has not been able to realize the gains unlike its industry peers.

What does this mean?

Velpic’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 difficult to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Velpic may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Velpic to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for VPC’s future growth? Take a look at our free research report of analyst consensus for VPC’s outlook.

• 2. Financial Health: Is VPC’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.

• 3. 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.