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Examining Seafarms Group Limited’s (ASX:SFG) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess SFG’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Seafarms Group
How SFG fared against its long-term earnings performance and its industry
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess different companies in a uniform manner using the latest information. For Seafarms Group, its most recent trailing-twelve-month earnings is -AU$18.89M, which, against the previous year’s level, has become less negative. Given that these figures may be relatively short-term, I have determined an annualized five-year figure for SFG’s net income, which stands at -AU$8.21M. This means that, Seafarms Group has historically performed better than recently, though it seems like earnings are now heading back in the right direction again.
We can further assess Seafarms Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Seafarms Group has seen an annual decline in revenue of -12.04%, 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 food industry has been relatively flat in terms of earnings growth in the previous year, levelling off from a notable 24.23% over the past half a decade. This means that though Seafarms Group is currently loss-making, any recent headwind the industry is enduring, Seafarms Group is less exposed compared to its peers.
What does this mean?
Seafarms Group’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 occur going forward, and when. The most insightful step is to assess company-specific issues Seafarms Group may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Seafarms Group to get a better picture of the stock by looking at: