After looking at Koovs plc's (LON:KOOV) latest earnings announcement (31 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Koovs's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
See our latest analysis for Koovs
Commentary On KOOV's Past Performance
KOOV is loss-making, with the most recent trailing twelve-month earnings of -₹1.4b (from 31 March 2019), which compared to last year has become more negative. Furthermore, the company's loss seem to be growing over time, with the five-year earnings average of -₹1.1b. Each year, for the past five years KOOV has seen an annual increase in operating expense growth, outpacing revenue growth of 15%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Viewing growth from a sector-level, the UK online retail industry has been growing its average earnings by double-digit 19% in the previous twelve months,
Given that Koovs is currently unprofitable, with operating expenses (opex) growing year-on-year at 3.1%, it may need to raise more cash over the next year. It currently has ₹767m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached ₹1.2b in the latest twelve months. Even though this is analysis is fairly basic, and Koovs still can cut its overhead in the near future, or raise debt capital instead of coming to equity markets, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Koovs may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Koovs to get a better picture of the stock by looking at:
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Financial Health: Are KOOV’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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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.