Assessing Northbaze Group AB (publ)'s (OM:NBZ) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how Northbaze Group is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its consumer durables industry peers.
Was NBZ's weak performance lately a part of a long-term decline?
NBZ is loss-making, with the most recent trailing twelve-month earnings of -kr23.3m (from 30 June 2019), 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 -kr9.4m. Each year, for the past five years NBZ has seen an annual increase in operating expense growth, outpacing revenue growth of 8.8%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Looking at growth from a sector-level, the SE consumer durables industry has been enduring some headwinds in the prior year, leading to an average earnings drop of -12%. This is a momentous change, given that the industry has been delivering a positive rate of 8.8%, on average, over the previous five years. This growth is a median of profitable companies of 8 Consumer Durables companies in SE including Besqab, Nobia and Duni. This suggests that though Northbaze Group is presently running a loss, whatever near-term headwind the industry is facing, the impact on Northbaze Group has been softer relative to its peers.
Given that Northbaze Group is currently unprofitable, with operating expenses (opex) growing year-on-year at 20%, it may need to raise more cash over the next year. It currently has kr34m in cash and short-term investments, however, opex (SG&A and one-year R&D) reachedkr74m in the latest twelve months. Even though this is analysis is fairly basic, and Northbaze Group still can cut its overhead in the near future, or open a new line of credit instead of issuing new equity shares, the analysis still helps us understand how sustainable the Northbaze Group’s operation is, and when things may have to change.
What does this mean?
Northbaze Group'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 hard to forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Northbaze Group may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Northbaze Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NBZ’s future growth? Take a look at our free research report of analyst consensus for NBZ’s outlook.
- Financial Health: Are NBZ’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 30 June 2019. This may not be consistent with full year annual report figures.
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