Measuring Xerium Technologies Inc’s (NYSE:XRM) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess XRM’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Xerium Technologies
Did XRM beat its long-term earnings growth trend and its industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess many different companies on a similar basis, using the most relevant data points. For Xerium Technologies, its most recent earnings (trailing twelve month) is -US$14.04M, which compared to the previous year’s figure, has become less negative. Since these values may be relatively short-term, I’ve determined an annualized five-year value for XRM’s net income, which stands at -US$7.98M. This shows that, Xerium Technologies has historically performed better than recently, though it seems like earnings are now heading back in the right direction again.
We can further analyze Xerium Technologies’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Xerium Technologies has seen an annual decline in revenue of -3.58%, 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 machinery industry has been growing its average earnings by double-digit 19.22% over the previous year, and a more muted 3.72% over the previous five years. This means though Xerium Technologies is presently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Xerium Technologies’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Xerium Technologies may be facing and whether management guidance has consistently been met in the past. You should continue to research Xerium Technologies to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Financial Health: Is XRM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 2. Valuation: What is XRM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in this free research report helps visualize whether XRM is currently mispriced by the market.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a 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.