Assessing Technical Communications Corporation’s (NASDAQ:TCCO) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Technical Communications is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its communications industry peers. Check out our latest analysis for Technical Communications
Commentary On TCCO’s Past Performance
I use the ‘latest twelve-month’ data, 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 blend enables me to assess different stocks on a more comparable basis, using new information. For Technical Communications, its latest earnings (trailing twelve month) is -US$1.23M, which, relative to the prior year’s figure, has become less negative. Since these values are somewhat short-term, I’ve estimated an annualized five-year value for TCCO’s net income, which stands at -US$1.02M. This shows that, Technical Communications has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further analyze Technical Communications’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Technical Communications has seen an annual decline in revenue of -20.70%, 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 communications industry has been growing its average earnings by double-digit 12.49% in the past twelve months, and a more subdued 8.41% over the past five years. This suggests that, although Technical Communications is presently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Technical Communications’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Technical Communications may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Technical Communications to get a more holistic view of the stock by looking at:
- Financial Health: Is TCCO’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.
- Valuation: What is TCCO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TCCO is currently mispriced by the market.
- 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 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.