After reading Intercede Group plc’s (AIM:IGP) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past 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 a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Intercede Group
Commentary On IGP’s Past Performance
To account for any quarterly or half-yearly updates, I use 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 different stocks on a more comparable basis, using the latest information. For Intercede Group, its most recent trailing-twelve-month earnings is -£3.3M, which, in comparison to the prior year’s level, has become less negative. Since these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for IGP’s earnings, which stands at -£0.7M. This means Intercede Group has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate Intercede Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Intercede Group’s top-line has increased by a mere 5.67%, 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 UK software industry has been growing its average earnings by double-digit 18.18% over the prior twelve months, and a more subdued 4.91% over the past five. This means while Intercede Group is currently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Intercede Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Intercede Group may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Intercede Group to get a better picture of the stock by looking at:
- 1. Financial Health: Is IGP’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 30 September 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.