Assessing Recon Technology Ltd’s (NASDAQ:RCON) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RCON’s recent performance announced on 30 September 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for Recon Technology
How Did RCON’s Recent Performance Stack Up Against Its Past?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 different companies in a uniform manner using new information. Recon Technology’s latest earnings -CN¥32.7M, which, against last year’s level, has become less negative. Given that these values may be somewhat short-term thinking, I’ve computed an annualized five-year value for Recon Technology’s net income, which stands at -CN¥18.0M. This shows that, Recon Technology 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 examine Recon Technology’s loss by researching what’s going on in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative at -5.85%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the US energy services industry has been relatively flat in terms of earnings growth . Thought this is a bit of a change from a volatile drop of -12.37% in the past few years. This suggests that any recent headwind the industry is facing, Recon Technology is less exposed compared to its peers.
What does this mean?
Recon Technology’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Recon Technology may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Recon Technology to get a better picture of the stock by looking at:
1. Financial Health: Is RCON’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. Valuation: What is RCON worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RCON is currently mispriced by the market.
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 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.