For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Marchex Inc’s (NASDAQ:MCHX) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. See our latest analysis for Marchex
Commentary On MCHX’s Past Performance
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine different stocks on a more comparable basis, using the latest information. For Marchex, its latest trailing-twelve-month earnings is -US$3.86M, which, against the previous year’s level, has become less negative. Given that these values may be somewhat short-term thinking, I’ve created an annualized five-year value for MCHX’s net income, which stands at -US$20.82M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further examine Marchex’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Marchex has seen an annual decline in revenue of -3.68%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 26.70% in the prior twelve months, and 18.27% over the past five years. This means that, although Marchex is presently running a loss, it may have benefited from industry tailwinds, moving earnings towards to right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Marchex may be facing and whether management guidance has regularly been met in the past. You should continue to research Marchex to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MCHX’s future growth? Take a look at our free research report of analyst consensus for MCHX’s outlook.
- Financial Health: Is MCHX’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.
- 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.