Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Eltek Ltd’s (NASDAQ:ELTK) 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. See our latest analysis for Eltek
How Well Did ELTK Perform?
For the most up-to-date info, I 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 technique enables me to assess various companies on a similar basis, using the most relevant data points. For Eltek, its latest trailing-twelve-month earnings is -US$3.77M, which, relative to the previous year’s level, has become more negative. Since these values are fairly short-term, I have determined an annualized five-year value for Eltek’s earnings, which stands at -US$263.70K. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further evaluate Eltek’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Eltek has seen an annual decline in revenue of -4.77%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US electronic industry has been growing its average earnings by double-digit 16.47% in the prior twelve months, and 10.05% over the past five years. This means any tailwind the industry is profiting from, Eltek has not been able to leverage it as much as its industry peers.
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 envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Eltek may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Eltek to get a more holistic view of the stock by looking at:
- Financial Health: Is ELTK’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.
- 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.