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Does SDC Investimentos SA.’s (ELI:SDCAE) Past Performance Indicate A Stronger Future?

Examining SDC Investimentos SA.’s (ENXTLS:SDCAE) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess SDCAE’s latest performance announced on 30 June 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for SDC Investimentos

Were SDCAE’s earnings stronger than its past performances and the industry?

I 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 analyze many different companies on a similar basis, using the latest information. For SDC Investimentos, its latest trailing-twelve-month earnings is -€47.09M, which, relative to the previous year’s level, has become less negative. Given that these values may be relatively nearsighted, I’ve computed an annualized five-year figure for SDC Investimentos’s net income, which stands at -€26.79M. This shows that, SDC Investimentos has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.

ENXTLS:SDCAE Income Statement Mar 13th 18
ENXTLS:SDCAE Income Statement Mar 13th 18

We can further examine SDC Investimentos’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade SDC Investimentos has seen an annual decline in revenue of -56.90%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the PT construction industry has been growing, albeit, at a muted single-digit rate of 9.54% in the prior twelve months, and 4.17% over the previous five years. This suggests that, while SDC Investimentos is currently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.

What does this mean?

Though SDC Investimentos’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues SDC Investimentos may be facing and whether management guidance has steadily been met in the past. You should continue to research SDC Investimentos to get a more holistic view of the stock by looking at:

  • 1. Financial Health: Is SDCAE’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 SDCAE 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 SDCAE 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 trailing twelve months from 30 June 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.

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