Advertisement
U.S. markets closed
  • S&P Futures

    5,208.25
    -6.50 (-0.12%)
     
  • Dow Futures

    39,203.00
    -20.00 (-0.05%)
     
  • Nasdaq Futures

    18,182.75
    -48.75 (-0.27%)
     
  • Russell 2000 Futures

    2,047.20
    -2.60 (-0.13%)
     
  • Crude Oil

    82.57
    -0.15 (-0.18%)
     
  • Gold

    2,164.80
    +0.50 (+0.02%)
     
  • Silver

    25.33
    +0.07 (+0.26%)
     
  • EUR/USD

    1.0875
    -0.0001 (-0.01%)
     
  • 10-Yr Bond

    4.3400
    +0.0360 (+0.84%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2721
    -0.0007 (-0.06%)
     
  • USD/JPY

    149.6370
    +0.5390 (+0.36%)
     
  • Bitcoin USD

    65,113.30
    -2,853.67 (-4.20%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,596.29
    -144.15 (-0.36%)
     

Does Imaginatik PLC’s (AIM:IMTK) Past Performance Indicate A Stronger Future?

When Imaginatik PLC (AIM:IMTK) released its most recent earnings update (31 March 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 Imaginatik 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 IMTK has performed. Check out our latest analysis for Imaginatik

Did IMTK beat its long-term earnings growth trend and its industry?

For the purpose of this commentary, I like to use 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 blend enables me to examine many different companies on a similar basis, using the most relevant data points. Imaginatik’s most recent bottom-line -£0.8M, which, in comparison to last year’s figure, has become less negative. Given that these figures are fairly short-term thinking, I have created an annualized five-year value for Imaginatik’s net income, which stands at -£1.4M. This means that, while net income is negative, it has become less negative over the years.

AIM:IMTK Income Statement Dec 8th 17
AIM:IMTK Income Statement Dec 8th 17

Additionally, we can examine Imaginatik’s loss by researching what’s going on in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over last few years has grown by a mere 4.87%. Given that top-line growth is also pretty stale the key to profitability going forward would be managing cost growth rates. Scanning growth from a sector-level, the UK software industry has been growing, albeit, at a subdued single-digit rate of 6.46% in the past year, and 3.99% over the previous few years. This means that, while Imaginatik is currently unprofitable, it may have gained from industry tailwinds, moving earnings in the right direction.

What does this mean?

Though Imaginatik’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Imaginatik may be facing and whether management guidance has steadily been met in the past. You should continue to research Imaginatik to get a more holistic view of the stock by looking at:

1. Financial Health: Is IMTK’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.

Advertisement