Assessing SGOCO Group Ltd’s (NASDAQ:SGOC) 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 SGOC’s recent performance announced on 30 June 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for SGOCO Group
Was SGOC’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, 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 technique allows me to examine different stocks in a uniform manner using the most relevant data points. For SGOCO Group, its latest trailing-twelve-month earnings is -US$4.78M, which, against the prior year’s figure, has become more negative. Given that these figures are fairly nearsighted, I’ve created an annualized five-year value for SGOCO Group’s net income, which stands at US$3.76M.
We can further analyze SGOCO Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years SGOCO Group has seen an annual decline in revenue of -48.50%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the US electronic industry has been growing its average earnings by double-digit 16.38% over the past year, and 10.33% over the previous five years. This means any tailwind the industry is deriving benefit from, SGOCO Group has not been able to reap as much as its industry peers.
What does this mean?
SGOCO Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues SGOCO Group may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research SGOCO Group to get a better picture of the stock by looking at:
- 1. Financial Health: Is SGOC’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 June 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.