Assessing Optiscan Imaging Limited’s (ASX:OIL) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess OIL’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. See our latest analysis for Optiscan Imaging

How Well Did OIL Perform?

I like to 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 enables me to examine various companies on a similar basis, using new information. For Optiscan Imaging, its most recent trailing-twelve-month earnings is -AU$1.78M, which compared to last year’s figure, has become less negative. Given that these figures may be fairly short-term, I have estimated an annualized five-year value for Optiscan Imaging’s net income, which stands at -AU$1.58M. This suggests that, Optiscan Imaging has historically performed better than recently, while it seems like earnings are now heading back in the right direction again.

We can further assess Optiscan Imaging’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Optiscan Imaging’s top-line has increased by 25.71% on average, implying 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 medical equipment industry has been relatively flat in terms of earnings growth in the prior year, evening out from a solid 16.05% over the previous five years. This suggests that despite the fact that Optiscan Imaging is currently loss-making, any near-term headwind the industry is enduring, the impact on Optiscan Imaging has been softer relative to its peers.

What does this mean?

Though Optiscan Imaging’s past data is helpful, it is only one aspect of my investment thesis. 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 Optiscan Imaging may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Optiscan Imaging to get a more holistic view of the stock by looking at:

1. Financial Health: Is OIL’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 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.