Measuring Art’s-Way Manufacturing Co Inc.’s (NASDAQ:ARTW) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess ARTW’s recent performance announced on 28 February 2018 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Art’s-Way Manufacturing
Was ARTW weak performance lately part of a long-term decline?
I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to analyze various companies on a similar basis, using new information. For Art’s-Way Manufacturing, its latest earnings (trailing twelve month) is -US$1.64M, which, in comparison to the previous year’s level, has become more negative. Since these figures may be relatively myopic, I’ve estimated an annualized five-year value for ARTW’s earnings, which stands at US$695.70K.
We can further analyze Art’s-Way Manufacturing’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Art’s-Way Manufacturing has seen an annual decline in revenue of -6.90%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 24.62% over the previous year, and a more subdued 4.45% over the previous five years. This means that any tailwind the industry is profiting from, Art’s-Way Manufacturing has not been able to reap as much as its average peer.
What does this mean?
Though Art’s-Way Manufacturing’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Art’s-Way Manufacturing may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Art’s-Way Manufacturing to get a more holistic view of the stock by looking at:
- Financial Health: Is ARTW’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.
- Valuation: What is ARTW 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 ARTW is currently mispriced by the market.
- 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 28 February 2018. 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.