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Integrated Media Technology Limited’s (ASX:ITL) Earnings Dropped -53.26%, Did Its Industry Show Weakness Too?

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After looking at Integrated Media Technology Limited’s (ASX:ITL) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for Integrated Media Technology

Was ITL’s recent earnings decline indicative of a tough track record?

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 blend allows me to analyze various companies on a similar basis, using the latest information. For Integrated Media Technology, its latest trailing-twelve-month earnings is AU$1.70M, which compared to the prior year’s figure, has sunken by a large -53.26%. Since these figures are somewhat short-term thinking, I’ve created an annualized five-year figure for Integrated Media Technology’s earnings, which stands at AU$1.04M This means despite the fact that earnings declined against the prior year, over the long run, Integrated Media Technology’s profits have been increasing on average.

ASX:ITL Income Statement Apr 13th 18
ASX:ITL Income Statement Apr 13th 18

What’s the driver of this growth? Let’s take a look at if it is merely because of an industry uplift, or if Integrated Media Technology has experienced some company-specific growth. In the last few years, Integrated Media Technology grew its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian media industry has been relatively flat in terms of earnings growth over the previous twelve months, levelling off from a solid 26.53% over the previous five years. This means that whatever recent headwind the industry is experiencing, it’s hitting Integrated Media Technology harder than its peers.

What does this mean?

Though Integrated Media Technology’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I suggest you continue to research Integrated Media Technology to get a better picture of the stock by looking at:

  • 1. Financial Health: Is ITL’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 ITL 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 ITL 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 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.