When Alexium International Group Limited (ASX:AJX) announced its most recent earnings (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Alexium International Group has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see AJX has performed. View our latest analysis for Alexium International Group
How Did AJX’s Recent Performance Stack Up Against Its Past?
I like to 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 different stocks on a more comparable basis, using new information. For Alexium International Group, its most recent earnings (trailing twelve month) is -A$12.2M, which, against last year’s figure, has become less negative. Since these figures are relatively nearsighted, I’ve estimated an annualized five-year value for AJX’s net income, which stands at -A$7.1M. This shows that, Alexium International Group has historically performed better than recently, although it seems like earnings are now heading back towards a more favorable position once more.
We can further assess Alexium International Group’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has risen by 73.17%, signalling that Alexium International Group is in a high-growth phase with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Scanning growth from a sector-level, the Australian chemicals industry has been growing growth, more than doubling average earnings over the previous year, and a strong 14.67% over the past five years. This suggests that any uplift the industry is benefiting from, Alexium International Group has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Alexium International Group may be facing and whether management guidance has consistently been met in the past. You should continue to research Alexium International Group to get a better picture of the stock by looking at:
1. Financial Health: Is AJX’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.