Today I will take a look at IXUP Limited’s (ASX:IXU) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the internet industry performed. As an investor, I find it beneficial to assess IXU’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for IXUP

How Well Did IXU Perform?

I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to analyze different companies in a uniform manner using the most relevant data points. For IXUP, its latest trailing-twelve-month earnings is -AU$6.45M, which, against the previous year’s level, has become more negative. Given that these figures are relatively myopic, I have created an annualized five-year figure for IXU’s net income, which stands at -AU$4.88M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.

We can further analyze IXUP’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade IXUP has seen its revenue fall by more than half, 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 internet industry has been growing its average earnings by double-digit 23.29% over the previous twelve months, and 20.81% over the past half a decade. This means whatever tailwind the industry is benefiting from, IXUP has not been able to reap as much as its average peer.

What does this mean?

IXUP’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to assess company-specific issues IXUP may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research IXUP to get a more holistic view of the stock by looking at:

1. Financial Health: Is IXU’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.