Did Jatenergy Limited’s (ASX:JAT) Earnings Growth Outperform The Industry?
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Jatenergy Limited’s (ASX:JAT) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Jatenergy
Were JAT’s earnings stronger than its past performances and the industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to examine many different companies on a similar basis, using the latest information. For Jatenergy, its latest trailing-twelve-month earnings is -AU$410.52K, which, in comparison to the prior year’s figure, has become less negative. Since these values are fairly myopic, I’ve computed an annualized five-year value for Jatenergy’s net income, which stands at -AU$2.28M. This suggests that, although net income is negative, it has become less negative over the years.
We can further assess Jatenergy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Jatenergy’s top-line has risen by 60.09% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the Australian retail distributors industry has been growing its average earnings by double-digit 38.63% over the previous year, and a less exciting 6.55% over the past half a decade. This means whatever tailwind the industry is benefiting from, Jatenergy has not been able to gain as much as its industry peers.
What does this mean?
Though Jatenergy’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Jatenergy may be facing and whether management guidance has steadily been met in the past. You should continue to research Jatenergy to get a more holistic view of the stock by looking at:
1. Financial Health: Is JAT’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. Valuation: What is JAT 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 JAT is currently mispriced by the market.
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 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.
