Understanding JetPay Corporation’s (NASDAQ:JTPY) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how JetPay is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View out our latest analysis for JetPay
Was JTPY’s weak performance lately a part of a long-term decline?
JTPY is loss-making, with the most recent trailing twelve-month earnings of -US$15.38m (from 31 March 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$7.96m. Each year, for the past five years JTPY has seen an annual increase in operating expense growth, outpacing revenue growth of 23.25%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Scanning growth from a sector-level, the US it industry has been growing its average earnings by double-digit 15.56% over the past twelve months, and 11.41% over the last five years. This means any tailwind the industry is enjoying, JetPay has not been able to reap as much as its industry peers.
Since JetPay is loss-making, with operating expenses (opex) growing year-on-year at 18.68%, it may need to raise more cash over the next year. It currently has US$6.70m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$20.69m in the latest twelve months. Although this is a relatively simplistic calculation, and JetPay may reduce its costs or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still helps us understand how sustainable the JetPay’s operation is, and when things may have to change.
What does this mean?
Though JetPay’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues JetPay may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research JetPay to get a better picture of the stock by looking at:
- Financial Health: Is JTPY’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.
- Valuation: What is JTPY 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 JTPY is currently mispriced by the market.
- 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 March 2018. 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.