Has BIO-key International Inc’s (NASDAQ:BKYI) Earnings Momentum Changed Recently?
After looking at BIO-key International Inc’s (NASDAQ:BKYI) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years 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 an important aspect. In this article I briefly touch on my key findings. View our latest analysis for BIO-key International
How Did BKYI’s Recent Performance Stack Up Against Its Past?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to examine various companies on a more comparable basis, using the latest information. For BIO-key International, its most recent earnings (trailing twelve month) is -US$5.04M, which, against the prior year’s level, has become more negative. Given that these figures are relatively myopic, I have determined an annualized five-year value for BIO-key International’s earnings, which stands at -US$2.65M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further examine BIO-key International’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years BIO-key International’s top-line has grown by a mere 6.79%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the US software industry has been growing its average earnings by double-digit 11.53% in the past year, and 12.49% over the past five. This shows that whatever tailwind the industry is profiting from, BIO-key International has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues BIO-key International may be facing and whether management guidance has dependably been met in the past. You should continue to research BIO-key International to get a better picture of the stock by looking at:
Financial Health: Is BKYI’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.
