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Should MER Telemanagement Solutions Ltd’s (NASDAQ:MTSL) Recent Earnings Decline Worry You?

After reading MER Telemanagement Solutions Ltd’s (NASDAQ:MTSL) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether MER Telemanagement Solutions’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for MER Telemanagement Solutions

How Did MTSL’s Recent Performance Stack Up Against Its Past?

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 various companies on a more comparable basis, using the latest information. For MER Telemanagement Solutions, its latest trailing-twelve-month earnings is -US$5.39M, which, against the prior year’s figure, has become more negative. Given that these figures are fairly short-term, I’ve calculated an annualized five-year value for MTSL’s net income, which stands at -US$1.35M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.

NasdaqCM:MTSL Income Statement Mar 7th 18
NasdaqCM:MTSL Income Statement Mar 7th 18

We can further assess MER Telemanagement Solutions’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years MER Telemanagement Solutions’s revenue growth has been somewhat unexciting, with an annual growth rate of 1.13%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Inspecting growth from a sector-level, the US communications industry has been growing, albeit, at a unexciting single-digit rate of 3.49% over the prior year, and a substantial 10.22% over the past half a decade. This suggests that whatever near-term headwind the industry is experiencing, it’s hitting MER Telemanagement Solutions harder than its peers.

What does this mean?

MER Telemanagement Solutions’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to examine company-specific issues MER Telemanagement Solutions may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research MER Telemanagement Solutions to get a more holistic view of the stock by looking at:

  • 1. Financial Health: Is MTSL’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. 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.

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