Today I will take a look at Avcorp Industries Inc’s (TSX:AVP) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the aerospace & defense industry performed. As an investor, I find it beneficial to assess AVP’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Avcorp Industries
Did AVP’s recent earnings growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, 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 allows me to analyze different stocks on a similar basis, using the most relevant data points. For Avcorp Industries, its latest trailing-twelve-month earnings is -CA$19.13M, which, relative to the previous year’s level, has become less negative. Since these values are fairly short-term, I have created an annualized five-year figure for AVP’s earnings, which stands at -CA$5.42M. This means that, Avcorp Industries has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further analyze Avcorp Industries’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Avcorp Industries’s top-line has grown by 12.72% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the Canadian aerospace & defense industry has been enduring some headwinds in the prior year, leading to an average earnings drop of -4.92%. This is a significant change, given that the industry has constantly been delivering a a notable growth of 10.31% in the last five years. This shows that even though Avcorp Industries is presently loss-making, whatever recent headwind the industry is experiencing, Avcorp Industries is relatively better-cushioned than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues Avcorp Industries may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Avcorp Industries to get a better picture of the stock by looking at:
- Financial Health: Is AVP’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 30 September 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.