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Does Zedge Inc’s (NYSEMKT:ZDGE) Past Performance Indicate A Weaker Future?

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Examining Zedge Inc’s (AMEX:ZDGE) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess ZDGE’s latest performance announced on 31 January 2018 and weight these figures against its longer term trend and industry movements. View our latest analysis for Zedge

How Well Did ZDGE Perform?

I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to examine various companies on a more comparable basis, using the latest information. For Zedge, its latest earnings (trailing twelve month) is -US$1.44M, which compared to the prior year’s figure, has become more negative. Since these values are relatively short-term thinking, I have created an annualized five-year value for ZDGE’s earnings, which stands at US$417.92K.

AMEX:ZDGE Income Statement Jun 6th 18
AMEX:ZDGE Income Statement Jun 6th 18

We can further assess Zedge’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Zedge’s top-line has risen by a mere 8.09%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Inspecting growth from a sector-level, the US software industry has been growing its average earnings by double-digit 13.27% over the prior twelve months, and 12.97% over the past five years. This suggests that any uplift the industry is profiting from, Zedge has not been able to reap as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Zedge may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Zedge to get a better picture of the stock by looking at:

  1. Financial Health: Is ZDGE’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 January 2018. 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.