Measuring AFT Corporation Limited’s (ASX:AFT) 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 AFT’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for AFT

Was AFT’s recent earnings decline worse than the long-term trend and the industry?

I like to 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 method allows me to analyze many different companies on a similar basis, using the latest information. For AFT, its most recent trailing-twelve-month earnings is -AU$565.74K, which, relative to the prior year’s level, has become more negative. Since these figures are relatively short-term thinking, I’ve created an annualized five-year value for AFT’s net income, which stands at -AU$669.12K. This means despite the fact that net income is negative, it has become less negative over the years.

We can further examine AFT’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years AFT has seen an annual decline in revenue of -48.79%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the Australian building industry has been growing, albeit, at a unexciting single-digit rate of 6.21% in the past twelve months, and 6.08% over the previous five years. This suggests that whatever tailwind the industry is enjoying, AFT has not been able to leverage it as much as its industry 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 predict what will occur going forward, and when. The most useful step is to examine company-specific issues AFT may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research AFT to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.