For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Rectifier Technologies Limited (ASX:RFT) useful as an attempt to give more color around how Rectifier Technologies is currently performing. View our latest analysis for Rectifier Technologies
How Did RFT’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I use 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 enables me to analyze many different companies on a similar basis, using the most relevant data points. “For Rectifier Technologies, its “, most recent bottom-line is A$0.4M, which, against last year’s level, has taken a dive by a substantial -74.60%. Since these values are somewhat short-term, I have computed an annualized five-year figure for RFT’s net income, which stands at A$0.3M. This means even though earnings growth was negative against the prior year, over a longer period of time, Rectifier Technologies’s profits have been increasing on average.
How has it been able to do this? Let’s see if it is solely owing to an industry uplift, or if Rectifier Technologies has seen some company-specific growth. In the past few years, Rectifier Technologies grew bottom-line, while its top-line fell, by effectively controlling its costs. This has led to to a margin expansion and profitability over time. Scanning growth from a sector-level, the Australian electrical industry has been growing its average earnings by double-digit 15.09% over the past year, and a less exciting 7.83% over the past five years. This suggests that any tailwind the industry is enjoying, Rectifier Technologies has not been able to gain as much as its industry peers.
What does this mean?
Though Rectifier Technologies’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have volatile earnings, can have many factors affecting its business. I suggest you continue to research Rectifier Technologies to get a better picture of the stock by looking at:
1. Financial Health: Is RFT’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.