Assessing KVH Industries Inc’s (NASDAQ:KVHI) 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 KVHI’s recent performance announced on 31 March 2018 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for KVH Industries
Was KVHI’s weak performance lately a part of a long-term decline?
KVHI is loss-making, with the most recent trailing twelve-month earnings of -US$10.04m (from 31 March 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$877.13k. Each year, for the past five years KVHI has seen an annual increase in operating expense growth, outpacing revenue growth of 6.20%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Scanning growth from a sector-level, the US communications industry has been growing its average earnings by double-digit 13.80% over the past twelve months, and a less exciting 6.43% over the last five years. This means that whatever uplift the industry is deriving benefit from, KVH Industries has not been able to reap as much as its industry peers.
Given that KVH Industries is currently unprofitable, with operating expenses (opex) growing year-on-year at 7.08%, it may need to raise more cash over the next year. It currently has US$41.10m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$78.35m in the latest twelve months. Although this is a relatively simplistic calculation, and KVH Industries may reduce its costs or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues KVH Industries may be facing and whether management guidance has steadily been met in the past. You should continue to research KVH Industries to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KVHI’s future growth? Take a look at our free research report of analyst consensus for KVHI’s outlook.
- Financial Health: Is KVHI’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 March 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.