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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Telesto SA. (WSE:TLO) useful as an attempt to give more color around how Telesto is currently performing. Check out our latest analysis for Telesto
Was TLO’s weak performance lately a part of a long-term decline?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to examine various companies on a similar basis, using new information. For Telesto, its most recent bottom-line (trailing twelve month) is -ZŁ1.07M, which compared to the prior year’s level, has become more negative. Since these figures may be fairly short-term thinking, I have determined an annualized five-year figure for Telesto’s net income, which stands at -ZŁ286.03K. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
We can further analyze Telesto’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Telesto’s revenue growth has been fairly soft, with an annual growth rate of -1.28%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the PL machinery industry has been relatively flat in terms of earnings growth . Thought this is a bit of a turnaround from a volatile drop of -5.12% in the previous few years. This shows that whatever near-term the industry is enduring, it’s hitting Telesto harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Telesto may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Telesto to get a more holistic view of the stock by looking at:
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Financial Health: Is TLO’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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Valuation: What is TLO 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 TLO is currently mispriced by the market.
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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.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 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.