With A -39.11% Earnings Drop, Is ForeScout Technologies Inc’s (NASDAQ:FSCT) A Concern?
Today I will examine ForeScout Technologies Inc’s (NASDAQ:FSCT) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of FSCT’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for ForeScout Technologies
Was FSCT’s recent earnings decline indicative of a tough track record?
I prefer to use data from the most recent 12 months, 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 allows me to analyze many different companies in a uniform manner using the most relevant data points. For ForeScout Technologies, its latest earnings (trailing twelve month) is -US$104.01M, which, in comparison to the previous year’s figure, has become more negative. Given that these figures are fairly short-term, I have calculated an annualized five-year figure for ForeScout Technologies’s net income, which stands at -US$62.40M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further evaluate ForeScout Technologies’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years ForeScout Technologies’s top-line has grown by 28.78% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the US software industry has been growing its average earnings by double-digit 10.46% in the past year, and 12.49% over the past five years. This means that whatever tailwind the industry is enjoying, ForeScout Technologies has not been able to reap as much as its average peer.
What does this mean?
ForeScout Technologies’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues ForeScout Technologies may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research ForeScout Technologies to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for FSCT’s future growth? Take a look at our free research report of analyst consensus for FSCT’s outlook.
Financial Health: Is FSCT’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.
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.
