Should You Be Content With EU Supply PLC’s (AIM:EUSP) 77.7% Earnings Growth?
When EU Supply PLC’s (AIM:EUSP) announced its latest earnings (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were EU Supply’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not EUSP actually performed well. Below is a quick commentary on how I see EUSP has performed. Check out our latest analysis for EU Supply
Were EUSP’s earnings stronger than its past performances and the industry?
For the most up-to-date info, I use 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 method allows me to analyze many different companies in a uniform manner using the most relevant data points. For EU Supply, the latest twelve-month earnings -£0.3M, which, relative to the previous year’s figure, has become less negative. Given that these figures are relatively short-term thinking, I have determined an annualized five-year value for EUSP’s net income, which stands at -£1.6M. This means though net income is negative, it has become less negative over the years.
Additionally, we can evaluate EU Supply’s loss by researching what has been happening in the industry along with within the company. First, I want to quickly look into the line items. Revenue growth over last few years has grew by 18.43%, implying that EU Supply is in a high-growth phase with expenses racing ahead high top-line growth rates. Eyeballing growth from a sector-level, the UK internet industry has been growing its average earnings by double-digit 14.72% in the past year, and 14.24% over the past couple of years. This means even though EU Supply is presently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
EU Supply’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues EU Supply may be facing and whether management guidance has dependably been met in the past. You should continue to research EU Supply to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for EUSP’s future growth? Take a look at our free research report of analyst consensus for EUSP’s outlook.
2. Financial Health: Is EUSP’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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
