For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at ForeScout Technologies Inc’s (NASDAQ:FSCT) 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. View our latest analysis for ForeScout Technologies
Despite a decline, did FSCT underperform the long-term trend and the industry?
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 method enables me to analyze different companies on a similar basis, using the most relevant data points. ForeScout Technologies’s latest twelve-month earnings -$83M, which, against the previous year’s level, has become more negative. Since these values are somewhat short-term, I have created an annualized five-year value for ForeScout Technologies’s earnings, which stands at -$54M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
Additionally, we can examine ForeScout Technologies’s loss by researching what has been happening in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over past couple of years has rose by 31.30%, indicating that ForeScout Technologies is in a high-growth period with expenses racing ahead high top-line growth rates. Looking at growth from a sector-level, the US software industry has been growing its average earnings by double-digit 18.12% in the previous twelve months, and a less exciting 7.70% over the past couple of years. This shows that whatever uplift the industry is enjoying, ForeScout Technologies has not been able to reap as much as its average peer.
What does this mean?
ForeScout Technologies’s track record can be a valuable insight into its earnings performance, but it certainly 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 ForeScout Technologies may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research ForeScout Technologies to get a more holistic view of the stock by looking at: