Does Alliance MMA Inc’s (AMMA) Past Performance Indicate A Weaker Future?
After looking at Alliance MMA Inc’s (NASDAQ:AMMA) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Alliance MMA
Commentary On AMMA’s Past Performance
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine various companies on a more comparable basis, using the latest information. For Alliance MMA, the most recent bottom-line -$8M, which compared to the prior year’s level, has become more negative. Given that these figures are fairly short-term thinking, I have computed an annualized five-year figure for Alliance MMA’s net income, which stands at -$4M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Alliance MMA’s loss by looking at what’s going on in the industry along with within the company. First, I want to briefly look into the line items. Revenue growth over past few years has more than doubled, signalling that Alliance MMA is in a high-growth period with expenses shooting ahead of high top-line growth rates. Eyeballing growth from a sector-level, the US media industry has been growing its average earnings by double-digit 10.21% in the previous year, and 11.01% over the past five years. This means any tailwind the industry is enjoying, Alliance MMA 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 occur going forward, and when. The most valuable step is to assess company-specific issues Alliance MMA may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Alliance MMA to get a more holistic view of the stock by looking at:
1. Financial Health: Is AMMA’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 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.
