Examining Q Technology Group Limited’s (ASX:QTG) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess QTG’s latest performance announced on 30 June 2017 and compare these figures to its longer term trend and industry movements. Check out our latest analysis for Q Technology Group

Were QTG’s earnings stronger than its past performances and the industry?

I like to use 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 blend allows me to examine different companies in a uniform manner using the latest information. For Q Technology Group, its most recent earnings (trailing twelve month) is -A$1.9M, which compared to the prior year’s figure, has become less negative. Given that these figures are fairly short-term, I have determined an annualized five-year value for Q Technology Group’s net income, which stands at -A$2.6M. This shows that, although net income is negative, it has become less negative over the years.

Additionally, we can evaluate Q Technology Group’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past couple of years has been negative at -9.61%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the Australian electronic equipment, instruments and components industry has been growing its average earnings by double-digit 17.56% in the previous year, and 10.90% over the previous five years. This suggests that, despite the fact that Q Technology Group is presently unprofitable, it may have benefited from industry tailwinds, moving earnings into a more favorable position.

What does this mean?

Q Technology Group’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 insightful step is to assess company-specific issues Q Technology Group may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Q Technology Group to get a better picture of the stock by looking at:

1. Financial Health: Is QTG’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. Valuation: What is QTG 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 QTG is currently mispriced by the market.

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.