Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at First Growth Funds Limited’s (ASX:FGF) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for First Growth Funds

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

For the purpose of this commentary, I like to 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 allows me to examine various companies on a more comparable basis, using the latest information. For First Growth Funds, its most recent earnings (trailing twelve month) is -A$0.9M, which, in comparison to last year’s level, has become more negative. Given that these values are relatively myopic, I have determined an annualized five-year value for FGF’s net income, which stands at -A$0.8M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been getting more and more negative over time.

We can further examine First Growth Funds’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the last couple of years has grown by 15.29%, signalling that First Growth Funds is in a high-growth phase with expenses racing ahead high top-line growth rates, leading to yearly losses. Eyeballing growth from a sector-level, the Australian capital markets industry has been growing, albeit, at a subdued single-digit rate of 3.16% in the past twelve months, and 8.12% over the past five years. This shows that any recent headwind the industry is enduring, it’s hitting First Growth Funds harder than its 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 predict what will occur going forward, and when. The most valuable step is to examine company-specific issues First Growth Funds may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research First Growth Funds to get a more holistic view of the stock by looking at:

1. Financial Health: Is FGF’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.