Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess eGain Corporation’s (NASDAQ:EGAN) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for eGain
Could EGAN beat the long-term trend and outperform its industry?
For the most up-to-date info, I 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 enables me to assess different companies on a similar basis, using the latest information. For eGain, its latest trailing-twelve-month earnings is -US$3.92M, which, against last year’s level, has become less negative. Since these figures may be somewhat short-term thinking, I’ve estimated an annualized five-year figure for eGain’s earnings, which stands at -US$4.02M. This shows that, while net income is negative, it has become less negative over the years.
We can further analyze eGain’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade eGain’s top-line has risen by a mere 6.56%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.58% over the prior year, and 18.33% over the past five years. This shows that, despite the fact that eGain is presently unprofitable, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues eGain may be facing and whether management guidance has dependably been met in the past. You should continue to research eGain to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for EGAN’s future growth? Take a look at our free research report of analyst consensus for EGAN’s outlook.
- 2. Financial Health: Is EGAN’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.
- 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 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.