When Mediacontech Sp.A. (BIT:MCH) released its most recent earnings update (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Mediacontech performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see MCH has performed. View our latest analysis for Mediacontech
Could MCH beat the long-term trend and outperform its industry?
I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze different stocks on a more comparable basis, using the most relevant data points. For Mediacontech, its latest earnings (trailing twelve month) is -€245.00K, which, relative to the prior year’s figure, has become less negative. Given that these figures are somewhat nearsighted, I have computed an annualized five-year value for MCH’s net income, which stands at -€5.91M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
We can further evaluate Mediacontech’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Mediacontech has seen an annual decline in revenue of -49.96%, 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 IT media industry has been relatively flat in terms of earnings growth over the last couple of years. This suggests that though Mediacontech is currently loss-making, whatever near-term headwind the industry is enduring, the impact on Mediacontech has been softer relative to its peers.
What does this mean?
Mediacontech’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Mediacontech may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Mediacontech to get a more holistic view of the stock by looking at:
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1. Financial Health: Is MCH’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.
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2. Valuation: What is MCH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MCH is currently mispriced by the market.
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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 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.