Does SemiLEDs Corporation’s (undefined:LEDS) 84.1% Earnings Growth Make It An Outperformer?
Measuring SemiLEDs Corporation’s (NASDAQ:LEDS) track record of past performance is a useful exercise for investors. It enables 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 LEDS’s recent performance announced on 31 August 2017 and weigh these figures against its long-term trend and industry movements. See our latest analysis for SemiLEDs
How Well Did LEDS Perform?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to analyze many different companies in a uniform manner using the latest information. For SemiLEDs, the most recent twelve-month earnings -$4.1M, which, against the prior year’s level, has become less negative. Since these values may be relatively short-term thinking, I’ve calculated an annualized five-year figure for LEDS’s earnings, which stands at -$25.7M. This means even though net income is negative, it has become less negative over the years.
Additionally, we can evaluate SemiLEDs’s loss by looking at 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 couple of years has been negative at -23.63%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Inspecting growth from a sector-level, the US semiconductors and semiconductor equipment industry has been growing its average earnings by double-digit 16.48% in the previous year, and a less exciting 6.51% over the previous five years. This shows that, while SemiLEDs is presently running a loss, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though SemiLEDs’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 forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues SemiLEDs may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research SemiLEDs to get a better picture of the stock by looking at:
1. Financial Health: Is LEDS’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 LEDS 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 LEDS 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.
