Analyzing Materialise NV’s (NASDAQ:MTLS) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess MTLS’s recent performance announced on 31 March 2018 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for Materialise
Despite a decline, did MTLS underperform the long-term trend and the industry?
MTLS is loss-making, with the most recent trailing twelve-month earnings of -US$1.02m (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$592.95k. Each year, for the past five years MTLS has seen an annual increase in operating expense growth, outpacing revenue growth of 17.18%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Scanning growth from a sector-level, the US software industry has been growing its average earnings by double-digit 11.91% in the previous twelve months, and 12.92% over the previous five years. This means that any tailwind the industry is deriving benefit from, Materialise has not been able to gain as much as its industry peers.
Given that Materialise is loss-making, with operating expenses (opex) growing year-on-year at 15.39%, it may need to raise more cash over the next year. It currently has US$44.70m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$87.74m in the latest twelve months. Although this is a relatively simplistic calculation, and Materialise may reduce its costs or open a new line of credit instead of issuing new equity shares, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
Though Materialise’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Materialise may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Materialise to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MTLS’s future growth? Take a look at our free research report of analyst consensus for MTLS’s outlook.
- Financial Health: Is MTLS’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.