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Measuring Vmoto Limited’s (ASX:VMT) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess VMT’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Vmoto

Did VMT’s recent earnings growth beat the long-term trend and the industry?

I look at the ‘latest twelve-month’ data, 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 technique enables me to assess many different companies in a uniform manner using the most relevant data points. For Vmoto, its most recent bottom-line (trailing twelve month) is -AU$6.31M, which, in comparison to last year’s figure, has become less negative. Given that these values are relatively short-term, I have created an annualized five-year figure for Vmoto’s earnings, which stands at -AU$3.19M. This suggests that, Vmoto has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.

We can further evaluate Vmoto’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Vmoto’s top-line has risen by 20.07% on average, implying that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the Australian auto industry has been growing its average earnings by double-digit 25.54% over the past twelve months, and a more muted 9.75% over the past five. This means that, even though Vmoto is currently loss-making, it may have gained from industry tailwinds, moving earnings towards to right direction.

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 envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Vmoto may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Vmoto to get a better picture of the stock by looking at:

• 1. Financial Health: Is VMT’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. 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.