In this commentary, I will examine Astrotech Corporation’s (NASDAQ:ASTC) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the aerospace and defense industry performed. As an investor, I find it beneficial to assess ASTC’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. See our latest analysis for ASTC
How ASTC fared against its long-term earnings performance and its industry
I look at data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to assess various companies on a similar basis, using the latest information. For Astrotech, the latest twelve-month earnings -$11.2M, which, relative to the prior year’s figure, has become less negative. Given that these values may be somewhat short-term, I have created an annualized five-year figure for Astrotech’s earnings, which stands at -$6.8M. This suggests that, Astrotech has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.
Additionally, we can analyze Astrotech’s loss by researching what’s going on in the industry along with within the company. Initially, I want to briefly look into the line items. Revenue growth over last few years has been negative at -38.05%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the US aerospace and defense industry has been growing its average earnings by double-digit 13.47% over the prior twelve months, and a less exciting 4.24% over the previous few years. This shows that, though Astrotech is presently loss-making, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Astrotech’s track record can be a valuable insight into its earnings performance, but it certainly 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 assess company-specific issues Astrotech may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Astrotech to get a better picture of the stock by looking at:
1. Financial Health: Is ASTC’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.