Should You Be Concerned About Plexus Holdings plc’s (LON:POS) Earnings Growth?
Assessing Plexus Holdings plc’s (AIM:POS) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess POS’s latest performance announced on 30 June 2017 and evaluate these figures to its historical trend and industry movements. See our latest analysis for Plexus Holdings
Did POS’s recent performance beat its trend and industry?
I prefer 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 technique allows me to analyze different companies in a uniform manner using new information. For Plexus Holdings, its most recent trailing-twelve-month earnings is -£5.7M, which compared to the previous year’s figure, has become less negative. Since these values are relatively short-term thinking, I have calculated an annualized five-year figure for POS’s earnings, which stands at £1.1M.
We can further analyze Plexus Holdings’s loss by researching what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -5.61%. The key to profitability here is to make sure the company’s cost growth is well-managed. Looking at growth from a sector-level, the UK energy services industry has been enduring severe headwinds over the previous few years, leading to an average earnings drop of -92.09% in the most recent year. This suggests that though Plexus Holdings is presently loss-making, whatever recent headwind the industry is facing, the impact on Plexus Holdings has been softer relative to its peers.
What does this mean?
Plexus Holdings’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 difficult to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues Plexus Holdings may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Plexus Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is POS’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.
2. 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 30 June 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.