How Does Determine Inc’s (NASDAQ:DTRM) Earnings Growth Stack Up Against Industry Performance?
Measuring Determine Inc’s (NASDAQ:DTRM) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess DTRM’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Determine
Did DTRM’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 latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to analyze many different companies in a uniform manner using new information. For Determine, its latest earnings (trailing twelve month) is -$8.7M, which, against the previous year’s figure, has become less negative. Given that these figures may be somewhat nearsighted, I have created an annualized five-year figure for DTRM’s earnings, which stands at -$9.9M. This means that, although net income is negative, it has become less negative over the years.
We can further assess Determine’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the last couple of years has increased by 12.63%, signalling that Determine is in a high-growth period with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.43% in the prior year, and 19.38% over the previous few years. This means though Determine is presently loss-making, it may have gained from industry tailwinds, moving earnings towards to right direction.
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 difficult to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Determine may be facing and whether management guidance has regularly been met in the past. You should continue to research Determine to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for DTRM’s future growth? Take a look at our free research report of analyst consensus for DTRM’s outlook.
2. Financial Health: Is DTRM’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.
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 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.
