Assessing Agilysys Inc’s (NASDAQ:AGYS) 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 AGYS’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for Agilysys
Despite a decline, did AGYS underperform the long-term trend and the industry?
I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to examine different companies on a more comparable basis, using new information. For Agilysys, its most recent earnings (trailing twelve month) is -US$13.42M, which, relative to last year’s figure, has become more negative. Given that these values may be somewhat nearsighted, I’ve computed an annualized five-year figure for AGYS’s earnings, which stands at -US$12.36M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further evaluate Agilysys’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Agilysys has seen an annual decline in revenue of -5.25%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US software industry has been growing its average earnings by double-digit 12.76% in the past twelve months, and 13.11% over the past five. This shows that whatever tailwind the industry is benefiting from, Agilysys has not been able to realize the gains unlike its industry peers.
What does this mean?
Agilysys’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 predict what will happen in the future and when. The most useful step is to assess company-specific issues Agilysys may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Agilysys to get a better picture of the stock by looking at:
- Financial Health: Is AGYS’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.