Understanding Qumu Corporation’s (NASDAQ:QUMU) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Qumu is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. Check out our latest analysis for Qumu

How Did QUMU’s Recent Performance Stack Up Against Its Past?

For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to assess different companies on a similar basis, using new information. For Qumu, its most recent earnings (trailing twelve month) is -$8.7M, which, relative to the prior year’s level, has become less negative. Given that these values are relatively short-term thinking, I’ve determined an annualized five-year value for QUMU’s earnings, which stands at -$18.7M. This shows that, while net income is negative, it has become less negative over the years.

We can further examine Qumu’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Qumu has seen an annual decline in revenue of -21.07%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.43% in the past year, and 19.38% over the past half a decade. This suggests that, despite the fact that Qumu is presently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.

What does this mean?

Though Qumu’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 envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Qumu may be facing and whether management guidance has dependably been met in the past. You should continue to research Qumu to get a better picture of the stock by looking at:

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

• 2. Financial Health: Is QUMU’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 30 September 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.