Has Avante Logixx Inc’s (CVE:XX) Earnings Momentum Changed Recently?
Analyzing Avante Logixx Inc’s (CVE:XX) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess XX’s recent performance announced on 31 March 2018 and compare these figures to its long-term trend and industry movements.
See our latest analysis for Avante Logixx
Was XX weak performance lately part of a long-term decline?
XX’s trailing twelve-month earnings (from 31 March 2018) of CA$176.49k has declined by -44.15% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 21.66%, indicating the rate at which XX is growing has slowed down. Why could this be happening? Let’s examine what’s transpiring with margins and whether the entire industry is facing the same headwind.
Revenue growth over the last few years, has been positive, however, earnings growth has been lagging behind meaning Avante Logixx has been ramping up its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the Canadian consumer services industry has been enduring some headwinds in the prior twelve months, leading to an average earnings drop of -6.11%. This is a momentous change, given that the industry has constantly been delivering a a notable growth of 28.13% in the past half a decade. This growth is a median of profitable companies of 4 Consumer Services companies in CA including Park Lawn, China Education Resources and EnerCare. This shows that whatever recent headwind the industry is experiencing, it’s hitting Avante Logixx harder than its peers.
In terms of returns from investment, Avante Logixx has fallen short of achieving a 20% return on equity (ROE), recording 2.28% instead. Furthermore, its return on assets (ROA) of 0.84% is below the CA Consumer Services industry of 4.45%, indicating Avante Logixx’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Avante Logixx’s debt level, has increased over the past 3 years from 10.07% to 11.57%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 20.45% to 6.26% over the past 5 years.
What does this mean?
Though Avante Logixx’s past data is helpful, it is only one aspect of my investment thesis. Usually companies that endure a prolonged period of diminishing earnings are undergoing some sort of reinvestment phase However, if the whole industry is struggling to grow over time, it may be a sign of a structural shift, which makes Avante Logixx and its peers a higher risk investment. You should continue to research Avante Logixx to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for XX’s future growth? Take a look at our free research report of analyst consensus for XX’s outlook.
Financial Health: Are XX’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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
