Does True Leaf Medicine International Ltd’s (FRA:TLA) Past Performance Indicate A Weaker Future?
When True Leaf Medicine International Ltd (DB:TLA) announced its most recent earnings (31 December 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 True Leaf Medicine International 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 TLA has performed. View our latest analysis for True Leaf Medicine International
How Did TLA’s Recent Performance Stack Up Against Its Past?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to assess various companies on a more comparable basis, using new information. For True Leaf Medicine International, its most recent earnings (trailing twelve month) is -CA$3.09M, which, against last year’s level, has become more negative. Given that these figures are somewhat nearsighted, I’ve estimated an annualized five-year figure for TLA’s earnings, which stands at -CA$1.71M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further evaluate True Leaf Medicine International’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years True Leaf Medicine International’s top-line more than doubled on average, signalling that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the DE personal products industry has been growing its average earnings by double-digit 15.16% in the prior year, and a less exciting 7.60% over the previous five years. This means any tailwind the industry is enjoying, True Leaf Medicine International has not been able to gain as much as its industry peers.
What does this mean?
True Leaf Medicine International’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues True Leaf Medicine International may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research True Leaf Medicine International to get a more holistic view of the stock by looking at:
1. Financial Health: Is TLA’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 trailing twelve months from 31 December 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.
