After reading Alliance MMA Inc’s (NASDAQ:AMMA) most recent earnings announcement (31 March 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Alliance MMA
How Well Did AMMA Perform?
I look at 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 enables me to analyze various companies on a similar basis, using the latest information. For Alliance MMA, its most recent bottom-line (trailing twelve month) is -US$14.11M, which compared to last year’s level, has become more negative. Since these figures are fairly myopic, I’ve estimated an annualized five-year figure for AMMA’s earnings, which stands at -US$5.82M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Alliance MMA’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Alliance MMA’s top-line more than doubled on average, implying that the business is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the US media industry has been growing its average earnings by double-digit 27.07% in the previous year, and a less exciting 6.01% over the past five years. This means that any tailwind the industry is enjoying, Alliance MMA has not been able to gain as much as its average peer.
What does this mean?
Though Alliance MMA’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 forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Alliance MMA may be facing and whether management guidance has dependably been met in the past. You should continue to research Alliance MMA to get a better picture of the stock by looking at:
- Financial Health: Is AMMA’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.