Assessing MTQ Corporation Limited’s (SGX:M05) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess M05’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for MTQ

How Did M05’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 latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess different companies on a similar basis, using the latest information. For MTQ, its latest earnings (trailing twelve month) is -S$17.69M, which, relative to the prior year’s figure, has become less negative. Since these figures may be relatively short-term thinking, I’ve created an annualized five-year value for MTQ’s net income, which stands at S$3.13M.

We can further assess MTQ’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years MTQ’s revenue growth has been relatively muted, with an annual growth rate of 1.50%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the SG energy services industry has been enduring severe headwinds in the prior year, leading to an average earnings drop of -47.91%. This is a major change, given that the industry has been delivering a positive rate of 2.34%, on average, over the last five years. This suggests that despite the fact that MTQ is presently loss-making, any recent headwind the industry is facing, MTQ is less exposed compared to its peers.

What does this mean?

MTQ’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 predict what will happen in the future and when. The most useful step is to assess company-specific issues MTQ may be facing and whether management guidance has consistently been met in the past. You should continue to research MTQ to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is M05’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. Valuation: What is M05 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether M05 is currently mispriced by the market.

• 3. 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.