After looking at IXUP Limited’s (ASX:IXU) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether IXUP’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for IXUP

Was IXU weak performance lately part of a long-term decline?

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 method allows me to examine different companies on a similar basis, using the most relevant data points. For IXUP, its most recent trailing-twelve-month earnings is -AU$6.45M, which compared to the previous year’s level, has become more negative. Since these figures are somewhat nearsighted, I’ve created an annualized five-year value for IXUP’s net income, which stands at -AU$3.70M. 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 last five years IXUP has seen an annual decline in revenue of -47.88%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Australian internet industry has been growing its average earnings by double-digit 15.92% in the prior year, and 10.14% over the previous five years. This suggests that any tailwind the industry is profiting 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. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues IXUP may be facing and whether management guidance has steadily been met in the past. You should continue to research IXUP to get a better picture 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.