In This Article:
Measuring Netlinkz Limited’s (ASX:NET) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess NET’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for Netlinkz
How Well Did NET Perform?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to examine different companies in a uniform manner using the most relevant data points. For Netlinkz, its most recent trailing-twelve-month earnings is -AU$9.54M, which, relative to the previous year’s level, has become less negative. Since these values may be relatively nearsighted, I’ve created an annualized five-year value for Netlinkz’s earnings, which stands at -AU$6.66M. This suggests that, Netlinkz has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
We can further assess Netlinkz’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Netlinkz has seen an annual decline in revenue of -33.29%, 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 Australian internet industry has been growing its average earnings by double-digit 15.92% in the past year, and 10.24% over the past five years. This means any uplift the industry is enjoying, Netlinkz has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Netlinkz may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Netlinkz to get a better picture of the stock by looking at:
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1. Financial Health: Is NET’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 NET 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 NET 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 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.