Was LOOPShare LTD’s (CVE:LOOP) Earnings Growth Better Than The Industry’s?
After reading LOOPShare LTD’s (TSXV:LOOP) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether LOOP has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. Check out our latest analysis for LOOPShare
Could LOOP beat the long-term trend and outperform its industry?
For the most up-to-date info, 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 method allows me to analyze different stocks on a similar basis, using the latest information. For LOOPShare, its most recent earnings (trailing twelve month) is -CA$2.61M, which, in comparison to the previous year’s level, has become less negative. Since these figures are somewhat short-term, I have estimated an annualized five-year value for LOOP’s net income, which stands at -CA$2.00M. This shows that, LOOPShare has historically performed better than recently, even though it seems like earnings are now heading back in the right direction again.
We can further assess LOOPShare’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years LOOPShare’s top-line has grown by 11.26% on average, indicating that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Eyeballing growth from a sector-level, the Canadian communications industry has been enduring severe headwinds in the prior year, leading to an average earnings drop of -30.46%. This is a substantial change, given that the industry has constantly been delivering a a strong growth of 15.88% in the last five years. This means that though LOOPShare is presently running a loss, whatever near-term headwind the industry is facing, the impact on LOOPShare has been softer relative to its peers.
What does this mean?
Though LOOPShare’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues LOOPShare may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research LOOPShare to get a better picture of the stock by looking at:
1. Financial Health: Is LOOP’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 LOOP 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 LOOP 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 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.
