Was SG Blocks Inc’s (SGBX) EPS Decline A Part Of Broader Industry Downturn?
Assessing SG Blocks Inc’s (NASDAQ:SGBX) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess SGBX’s recent performance announced on 30 June 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for SG Blocks
How Well Did SGBX Perform?
I prefer to 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 method allows me to assess many different companies on a more comparable basis, using new information. For SG Blocks, the latest twelve-month earnings -$4M, which compared to the previous year’s figure, has become more negative. Given that these values are somewhat short-term thinking, I have estimated an annualized five-year figure for SG Blocks’s net income, which stands at -$2M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further assess SG Blocks’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over last couple of years has been fairly subdued, remaining flat on average at -1.61%. Since top-line growth is also pretty flat, the key to profitability moving forward would be controlling costs. Scanning growth from a sector-level, the US machinery industry has been growing, albeit, at a unexciting single-digit rate of 7.47% in the past twelve months, and 5.20% over the previous five years. This means that whatever uplift the industry is benefiting from, SG Blocks has not been able to realize the gains unlike its average peer.
What does this mean?
Though SG Blocks’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 SG Blocks may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research SG Blocks to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SGBX’s future growth? Take a look at our free research report of analyst consensus for SGBX’s outlook.
2. Financial Health: Is SGBX’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.
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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
