When TV2U International Limited (ASX:TV2) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well TV2U International has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see TV2 has performed. View our latest analysis for TV2U International

How Did TV2’s Recent Performance Stack Up Against Its Past?

I use the ‘latest twelve-month’ data, 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 blend enables me to examine various companies on a more comparable basis, using the latest information. For TV2U International, its latest earnings (trailing twelve month) is -AU$5.17M, which, relative to last year’s level, has become less negative. Since these figures may be fairly nearsighted, I have created an annualized five-year figure for TV2U International’s earnings, which stands at -AU$11.70M. This shows that, even though net income is negative, it has become less negative over the years.

We can further assess TV2U International’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade TV2U International’s top-line more than doubled on average, signalling that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the Australian internet industry has been growing its average earnings by double-digit 15.92% over the prior twelve months, and 10.24% over the previous five years. This shows that, though TV2U International is currently loss-making, it may have gained from industry tailwinds, moving earnings in the right direction.

What does this mean?

TV2U International’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 hard to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues TV2U International may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research TV2U International to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.